Asia Pacific's Muggy Cold War

The endless run of Asia Pacific conferences attended by the region’s powers has founded a deeply troubling new paradigm.  With the US insisting that China must be contained by the multitude of smaller states that surround her.

Sound familiar? A muggy cold war? Beijing the new Moscow?

India plays no small part in this US obsession with the meteoric rise of China, who in ten years will enjoy a GDP that will surpass America’s. The State Department sees India as a wonderfully heavy counter weight to the Red menace.

This has manifested itself with Gillard declaring, without consulting Rudd, her Foreign Minister, who vehemently opposes the policy, that Australia will indeed supply India with Uranium. This was hot on the heels of Gillard meeting with Obama, Australia’s Commander-in-Chief in Hawaii.

The State Department will not be devastated by India being armed to the teeth with Nuclear weapons, vaguely pointed at Shanghai, and of course even less concerned if Indian manufacturing is better fueled by nuclear plants.

Obama and Gillard’s announcement of the establishment of a new US marine base in Darwin has ramifications. It embitters an Australian, Chinese relationship that means so much more to Australia than it does to China.

The Australian mining sector has a steadily increasing trade with India but it is still a fraction of the coal and ore exports to the devouring dragon. This establishment of the Marine base is a celebrated snub to China.  Australia really is playing with fire and has not appreciated just how catastrophic a Chinese response would be for this country.

For Chinese wealth is matching her military power but her real immediate power is economic. They are offended by Australia having a foreign policy that is lazily xeroxed from the US State Department. If China decided to flex her tail and discourage Chinese importers of Australian minerals then the US would be in no position what so ever to help.  Regardless of how many garrisons dot the coast.

If China does exert economic pressure then Australia will back track shamelessly and will strongly reassess her role in the effeminate constraining of China. She cannot afford to do otherwise, when elections are at stake ANZUS be damned.

Can India afford to help tame the dragon? High on the agenda, in this long season of expensive talk shops, was the fact that China has laid claim to the better part of the South China Sea.

This area is sickly rich in oil.  India’s thirst for black gold is desperate. India is increasing her reach in exploration by scouting for new partners in the region. This Chinese claim of the Sea confidently challenges that. It will be strongly in India’s’ interests to side with the region’s powers against this stake.

The Chinese claim has also scared the living daylights out of the US. Her navies 7^th Fleet have used the South China Sea as her own by perpetually patrolling the area for decades in enormous convoys.

Paul Keating, the former Prime Minister of Australia,  very recently made the observation that China had good grounds for this claim as the predicted US reaction to the equivalent, the Chinese Navy patrolling off the coast of Florida, would not be polite.

I am of the mind that it should not be a given that India side against China. In fact India should take a leaf out of Lee Kwan Yew’s, Singapore’s former dictator, wizened diplomacy. My Father asked him why he let the Russian fleet in after the Americans fleet had barely just set sail out of Singapore’s docks. “Oh David, you are so young.”

He was a Statesman who knew how to play each superpower off each other.  I believe India could benefit enormously from this.  One month Washington’s darling and the next up for anything with Beijing.  India must not be bullied into playing this counter weight role to China just because it fits the US’s motives so beautifully.

India should not get involved in this game that is the same manure in a different bucket. For all the buzz that this is a new Asia Pacific stand off; China and the US have a long and bloody relationship in our region.  Korea, Malaya and Vietnam were deathly conflicts that extinguished millions of civilian’s lives and Korea ploughed the ground for future global nuclear war. This is plainly evident in North and South Korea.

Comically, the US’s Asia Pacific policy during those conflicts was  strongly motivated by their determination for Communism to not threaten the capitalist way of life. Now their motivation is to stop China being so shamelessly capitalist and threatening the US’s entrenched policy of living beyond her means.  Which, co-incidentally, is only made possible by China being, by far, the largest buyer of US treasury bonds.

India has it’s own destiny to reclaim and cannot be distracted by signing up as the US’s wingman in this fast developing geopolitical nightmare.

Qantas And Australasian Globalisation

Australia is many decades behind New Zealand in coming to terms with globalisation. This was very clearly evident when, with the grounding of Qantas, the countries personalities shouted naked racist slogans against Asia.

The phrase of the aftermath was ‘Asianisation’.  Mostly spluttered from the Transport Workers Union’s Tony Sheldon ‘stand by the workforce, the Australian brand of Qantas and not have it Asianised’. Dick Smith’s (The erstwhile electronic store chain chap) polemic rant was memorable. “When I get my private jet serviced in Dubai it’s half the price of Australia because it’s all bloody Pilipinos!” I know if these tirades were uttered in civilized New Zealand these opportunists would be in a Fairtrade recycled doghouse. In Australia they are championed.

These instinctively racist comments were a reaction to a long standing dispute with Qantas management who are planning to greatly expand their outsourcing to Asia. The first dispute of this transition was in 2006 when Qantas outsourced a fair size of their IT to Tata Consultancy Services to the loss of 300 Australian jobs.

Joyce, the CEO of Qantas, insists that if outsourcing is not disallowed by the Unions, Qantas will not only be half it’s fleet size by this time next year they will ultimately perish.

This is true. A global business cannot survive by being hijacked by a local workforce who insist on being paid inflated wages out of sheer nationalism and sentimentality.  This hurts my unhinged lefty sentiments but it is a cold fact.

Australians are outraged by the outsourcing of services for their airline but only 18 per cent choose the airline to travel abroad because for $50 bucks less you get to travel on an airline with hostesses that don’t resemble scrum props and don’t have the charm of a country pub bouncer. For Asia does it better.  And if it’s a few bucks cheaper fair dinkum working Aussie families feel the flying kangaroo can go and get made in to Russian sausages.

It’s no news that India is the world’s outsourcing capital. It is 60 per cent of the countries GDP (Only employing one percent of the population). Finding enormous success with a business model that could be paraphrased as ‘Half the price, twice the size’ they have cornered an elliptical market.

India aircraft engineering service will be candidates for the further Qantas outsourcing contracts.  They already have an enormous IT contract with the company.  India could very well be the saviour of Australia’s greatest international brand. Will India be the saviour of the sacred Holden?

In the very same week as the unprecedented news blitz of outsourcing woes for Qantas, Holden announced that several jobs would be lost to future outsourcing.  Could Tata be a manufacturing candidate? They would have to be as they have saved Jaguar Land Rover. But that reminds us of the cultural challenges of outsourcing.

If you are a Top Gear fan you would have cringed at those pompous twits cringing at their countries icons Land Rover and Jaguar being manufactured by an Indian company.  As an Australia will launch in to his best Peter Sellers Indian accent when they discuss telephone banking.

These cultural challenges are compounded by Australians holding a deeply inherent belief that being overpaid is a God given right. Especially employees of a company, such as Qantas, that is perceived as an Australian institution rather than a business. A local Mum and Pop milkbar rather than a global business.

The old instincts of protectionism will never die and I am starting to believe  that a return to hugely expensive protective tariffs can not be discounted.  The Western experiment with globalization  has largely been  a mixed bag. The current European crisis is a symptom of this. Europe, like Australia, has relocated it’s manufacturing base to the emerging nations and no matter how well you dress this fact in free trade communities, like the Eurozone and the proposed APAC model, we have lost our means of production which is the fundamental foundation for the nurturing of wealth.

A return to those uncompetitive days is not impossible when you hear Australians hyper allergic reaction to not only jobs been lost but more often previously generous salaries and conditions being dramatically reduced.

But the Qantas shareholders don’t give two samosas. They voted overwhelmingly for Joyce’s plans because they want a dividend and they don’t care if that bonus is dressed in a sari and has an accent.  Australian shareholders would make vegemite in a Kolkata hospice if it was cheaper and they thought they would get away with it.

I have mixed feelings. I see the way forward intellectually but in my heart I am frightened for I see great hardship for Australasia being thrown from the nest and flying in a turbulent  world. And if I brutally honest I too feel greatly attached to the undeserved privilege that we have enjoyed but not acknowledged. In this country, with it’s astronomical mineral wealth, the Saudi Arabia of the Pacific.

But I do greatly look forward to the global economy drowning out the racists, that have surfaced in this dispute, and dragging them, kicking and whining into an Asian century.

A positive start would be for Joyce to bide by his vision and outsource the entire Qantas management to Asia. For the companies experiment with outsourcing to Ireland is a strange failure and no Indian CEO would ground his fleet voluntarily.