Australia should not be so preoccupied with APEC that it ignores how Russia and China are re-shaping the Asia-Pacific region through the Shanghai Cooperation Organisation (SCO), warns Warren Reed.When most Australians think of Asia, images of Bali, Thailand and other exotic places come to mind. If you're in business, then China looms larger.Those with more age on the clock and with an interest in economic relations in the region know we've been through it all before with Japan. We were lucky, too, that the Japanese bus just happened to come along when Britain was joining the European Community and cancelling our privileged and longstanding access to its market.
However, some may remember how the Japanese later cleverly overcame the seller's advantage we had in many resource sectors. Through strategic investment strategies in other countries - for example, in coal-mining - they were able to manipulate world prices in their favour and achieve a buyer's advantage at our expense.
Is it all about to happen again, they wonder, this time with China, though on a much grander scale?
Burgeoning relationshipThe Vietnam War, the Korean War, the defeat of the French at Dien Bien Phu in 1954 and even the Pearl Harbour attack are for many already lost in the past. No need to worry about that. China's the big news of the day and there's so much mileage in that one burgeoning relationship that nothing else seems to matter.
Well, it does. Because behind all the glitz of the China thing, history's being made, and in a way that should command far more attention in Australia than it does. And it's not happening in the Asia-Pacific arena where organisations such as APEC tend to focus our attention. Rather, it's back the other way, where China interfaces with Russia, Central Asia and India. This is classic Great Game (a term immortalised by Rudyard Kipling in his novel
Kim in 1901) territory, where the powers of the day watched each other's every move with the eyes of a hawk.
Today, the Game is on again, but this time round those at the new geopolitical centre of the world are concerned more with what they can share than what keeps them apart. Resources like gas and oil have a lot to do with it, but it doesn't stop there.
Symbolic of the new dialogue in the region is the Shanghai Cooperation Organisation (SCO) that was set up in 2001 by Russia and China, with Uzbekistan, Kazakhstan, Kyrgyzstan, and Tajikistan as members. India, Iran, Pakistan and Mongolia were granted observer status.
Originally a loose security alliance, it now covers energy, nuclear power, the fight against organised crime and terrorism, plus health and education.
The SCO hardly ranks alongside APEC and NATO, but in the not too distant future it might. When you see it alongside the Collective Security Treaty Organisation (CSTO), which has almost the same membership as the Shanghai grouping, you get a sharper perspective. Neither the SCO nor the CSTO excites much interest in Australia. They're merely part of the alphabet soup in which we all swim these days.
To focus the mind, it's useful to note that Russia holds the largest reserves of natural gas in the world, nearly one third (Australia has less than 1.5 per cent), which is why Russia may become as important as China and India in the transfer of economic power that will take place in coming decades.
Whether India and Iran take full membership of the Shanghai Cooperation Organisation is yet to be seen; though in India's case it may choose to stand back in order to carve out for itself a major role in the future as a power-broker between East and West. That is a role it is ideally qualified for, and one it is certainly able to handle in terms of diplomatic skill.
When the Indian Prime Minister, Manmohan Singh, arrived in Beijing in mid-January on a three-day visit, he stated baldly that Delhi would have no part in any alliance with the US, Australia and Japan aimed at "containing China".
Meanwhile, China's economy surges ahead, with plans that may suck up some of the best talent that Australia can produce. New science and technology research-centres are likely to offer funding and salaries that outstrip anything we can put up. Many young Australians studying in Asia have no plans to come back: they'll stay close to the action where their skills are generally more highly valued.
Keeping one's headIf Kipling had a word of advice for us this time round, it would be to make sure our bureaucratic and corporate planners keep their heads. To which we should add, our national education policy should be tight, realistic and geared to the future.
- Warren Reed is a former intelligence officer who was also chief operating officer of the Committee for Economic Development of Australia (CEDA).
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