President Barack Obama will end his trip to Asia in mid-November at the Group of 20 (G20) Leaders’ Summit in Brisbane, Australia, after attending the Asia-Pacific Economic Cooperation leaders’ meeting in Beijing and the East Asia Summit in Myanmar. The G20 summit will give Obama and top world leaders a chance to discuss critical challenges facing the global economy, including China’s slowdown, the tardy pace of reform in Japan, and looming deflation in Europe.

The meeting will give its Australian hosts an opportunity to help the G20 regain the focus and clout it had at the height of the global financial crisis in 2008. Australia’s treasurer, Joe Hockey, said in a speech at CSIS on October 8 that “to reinvigorate the group, the agenda had to focus on achieving outcomes and uniting around an ambitious but deliverable target.”

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The Month That Was

• Australian special forces to "advise and assist" in Iraq
• New Zealand secures UN Security Council seat
• Fiji rejects offer to rejoin Pacific Islands Forum

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Looking Ahead

• Global Security Forum 2014
• Strategic Asia book launch

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Brisbane G20 Summit Provides Opportunity to Rescue Grouping’s Slipping Image

By Murray Hiebert (@MurrayHiebert1), Senior Fellow and Deputy Director, Pacific Partners Initiative (@PacPartnersDC), CSIS

President Barack Obama will end his trip to Asia in mid-November at the Group of 20 (G20) Leaders’ Summit in Brisbane, Australia, after attending the Asia-Pacific Economic Cooperation leaders’ meeting in Beijing and the East Asia Summit in Myanmar. The G20 summit will give Obama and top world leaders a chance to discuss critical challenges facing the global economy, including China’s slowdown, the tardy pace of reform in Japan, and looming deflation in Europe.

The meeting will give its Australian hosts an opportunity to help the G20 regain the focus and clout it had at the height of the global financial crisis in 2008. Australia’s treasurer, Joe Hockey, said in a speech at CSIS on October 8 that “to reinvigorate the group, the agenda had to focus on achieving outcomes and uniting around an ambitious but deliverable target.”

Journalists will watch whether Russian president Vladimir Putin attends the November 15–16 summit after Australian prime minister Tony Abbott said he would “shirt-front” the Russian leader over the shooting down of Malaysian Airlines Flight 17 by Russian-backed Ukrainian rebels. (Shirt-fronting, in Australian football, refers to tackling a player from the front). Twenty-seven Australians died in that crash. Putin has not indicated that he plans to skip the summit.

The G20 leaders are expected to devote time at the summit to discussing broader global crises, including the offensive by Islamic State fighters in Syria and Iraq and the international response to the Ebola epidemic in West Africa.

One of the key themes Australia is focusing on is developing strategies to tackle the global economic slowdown. The G20 finance ministers meeting in Sydney in September agreed to take new policy actions to generate an additional 2 percent of global GDP in 2018. Each country was called on to develop individual growth strategies, and the ministers reported that roughly 1,000 measures (none of which have been detailed publicly) had been proposed, of which 80 percent were new; together these were expected to raise global GDP by 1.8 percent.

The finance ministers agreed to pivot from government-led growth to growth spearheaded by the private sector. The ministers focused particularly on increased investment in infrastructure and called on governments to remove barriers to private investment in public works projects. Hockey has proposed a still-relatively undefined concept about establishing an “infrastructure hub” run by Australia; it is unclear how this idea will work alongside the new Asian Infrastructure Investment Bank launched by China.

Mike Callaghan, director of the G20 Studies Center at the Lowy Institute in Australia and former senior Treasury official, in an October report called on G20 leaders to bolster their pledges to roll back protectionist trade measures, including nontariff barriers, introduced at the height of the global economic crisis. Callaghan said the credibility of the G20 would be strengthened if its leaders called on the World Trade Organization to monitor their progress in lifting these measures.

The G20 leaders will likely trumpet their achievements in building a more resilient financial regulatory system in the wake of the 2008 global meltdown. Callaghan called on the leaders to adopt strengthened capital requirements, take steps to deal with financial institutions considered “too big to fail,” and launch measures to make derivatives markets less risky.

The leaders will discuss the need to develop a new system of corporate tax rules that will increase transparency, close loopholes, and restrict the use of tax havens. They are also expected to tackle so-called base erosion and profit shifting (BEPS) tactics, under which multinationals move their profits to jurisdictions that collect low or no taxes. Early this year G20 finance ministers discussed launching a common reporting standard that would serve as an automatic exchange of tax information.

The G20 leaders will undoubtedly put pressure on the United States to ratify the International Monetary Fund (IMF) quota commitments to which Washington agreed in 2010. The reform would shift slightly more IMF quota shares to emerging and developing economies such as China, but it has been blocked by the U.S. Congress.

Some G20 leaders, including Obama, could seek to put a discussion of the economic impact of climate change on the agenda ahead of next year’s global climate summit in Paris. But Australia, which under Abbott became the first country to repeal a national carbon tax, has insisted climate change will not be on the agenda and instead wants to focus on energy efficiency and the lifting of subsidies on fossil fuels.

The G20 is often criticized for failing to come up with concrete measures, and its members have less than a sterling record in following through on actions that leaders have agreed on. One problem, of course, is that the G20, with its membership ranging from China and India to the United States and Japan, is very diverse and its members often have conflicting interests. The G20 does not have an enforcement mechanism or a secretariat to monitor whether members are implementing agreed-upon reforms.

“The G20’s reputation has been slipping since its high point in the aftermath of the global financial crisis,” Callaghan wrote in his report. “The Brisbane Summit is an opportunity to reverse that trend.” To reinvigorate the forum, Callaghan argued, Australia will need to ensure that the summit has “a ‘headline’ outcome; engaged leaders; a minimum of rhetoric; [and] a focus on implementation.”

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The Month That Was

Australia

Australian special forces to “advise and assist” in Iraq. Foreign Minister Julie Bishop on October 20 announced that the governments of Australia and Iraq had agreed to a legal framework under which Australian special forces will help build up the capacity of Iraqi troops fighting the Islamic State in Iraq and Syria. The agreement will allow Australian special forces to “advise and assist” but not undertake independent combat missions in Iraq. Canberra sent 200 special forces soldiers to the United Arab Emirates in September to await clearance from Baghdad to enter Iraq.

Parliament reverses restrictions on those wearing burkas. Australia’s Parliament on October 21 reversed a controversial rule passed earlier in the month forcing Muslim women who cover their faces to sit in a glass-enclosed area of the public gallery at Parliament House. Prime Minister Tony Abbott, who initially supported the plan and called the burka a “fairly confronting form of attire,” asked House Speaker Bronwyn Bishop and Senate President Stephen Parry to abandon the rule amid widespread criticism. Parliamentary leaders had initially argued that the rule would help safeguard lawmakers from potential attacks by Islamic extremists.

Parliament passes controversial bill to combat extremism. Australia’s Parliament on October 30 approved sweeping changes to the nation’s security laws to strengthen the ability of the state to combat the threat of Islamic extremism. The controversial new legislation makes it a criminal offense to advocate terrorism; bans travel abroad to areas deemed home to terrorist activity without a valid reason; and strengthens the power of security agencies to detain terrorism suspects. Parliament's human rights committee and outside organizations have criticized the law as a breach of Australians' rights, especially to free expression.

Abbott threatens to “shirt-front” Putin at G20. Prime Minister Tony Abbott said October 14 that he intended to “shirt-front” Russian president Vladimir Putin during the November 15–16 Group of 20 Leaders’ Summit in Brisbane over the downing of Malaysian Air Flight 17, which rebels in eastern Ukrainian shot down in July. The United States and other western nations have accused Russia of providing the missile launcher that brought down the plane and killed its 298 passengers, including 27 Australians. Shirt-fronting describes a physical frontal tackle of a player in Australian football. Many Australian commentators had urged Abbott to ban Putin from the G20 summit altogether, which the prime minister refused to do.

China announces new tariff on coal amid trade negotiations. The Chinese government on October 8 reintroduced tariffs on coal that will hit Australia, a major exporter, particularly hard. The new tariffs place a 3 percent duty on coking coal and 6 percent on all other coal. Australia and China are currently negotiating a free trade agreement and Beijing has signaled that it will abolish the new coal tariffs when the agreement is finalized.

BHP to increase iron production despite price slump. Australian mining giant BHP Billiton plans to boost its iron ore production 30 percent by 2017, to 290 million tons annually, despite a slump in global prices, according to an October 6 statement from the company’s iron ore president, Jimmy Wilson. The price of iron has dropped 40 percent in 2014 to less than $80 per metric ton. BHP’s decision seems to be driven at least in part by its Australian competitor Rio Tinto’s November 2013 announcement that it will boost iron production to 360 million tons in 2015.

New Zealand

New Zealand secures UN Security Council seat. The UN General Assembly on October 16 elected New Zealand to a nonpermanent seat on the Security Council for the 2015–2016 term. New Zealand garnered 145 of 193 votes to beat out Turkey for a seat. New Zealand last served on the council in 1994 and has been campaigning for a seat since 2004. The other four available seats went to Angola, Malaysia, Spain, and Venezuela.

Candidates vie for Labour Party leadership. Contenders to succeed David Cunliffe as leader of the opposition Labour Party have begun to campaign ahead of a November 18 vote. Cunliffe resigned following Labour’s poor showing in the September national elections, and four candidates—Andrew Little, Nanaia Mahuta, David Parker, and Grant Robertson—are seeking to replace him. The winner will be selected in a weighted vote in which sitting Labour lawmakers will account for 40 percent, ordinary party members 40 percent, and members of seven affiliated unions 20 percent. Robertson reportedly has the most support among Labour parliamentarians while Little is supported by the unions.

Key announces new cabinet. Prime Minister John Key on October 6 announced the cabinet for his third term with Bill English continuing as deputy prime minister and finance minister for a third term. Murray McCully remains foreign minister while National’s third-ranking member, Gerry Brownlee, added defense minister to his portfolio in a signal that the government will place more emphasis on security issues. Key also created a broader national security portfolio for himself and for the first time assigned direct oversight of government intelligence agencies to Attorney General Chris Finlayson.

Pacific Islands

Fiji rejects offer to rejoin Pacific Islands Forum. Fiji's government on October 23 announced that it will not rejoin the Pacific Island Forum unless the memberships of Australia and New Zealand are revoked, making them observers like other donor nations. The forum lifted Fiji’s suspension following the island nation’s democratic elections in September 2014. The suspension had been in place since then-military leader and current prime minister Voreqe “Frank” Bainimarama failed to move toward democracy in 2009.

U.S., Australia lift sanctions on Fiji. Australia and the United States on October 30 both announced the lifting of all remaining sanctions on Fiji in the wake of September elections deemed largely free and fair. The sanctions lifted included travel bans on members of the Fijian government and restrictions on financial aid. Australian foreign minister Julie Bishop announced Canberra’s decision during a visit to Fiji—the first visit by a foreign minister since the election. While announcing the U.S. decision, Ambassador to Fiji Frankie Reed also signaled Washington’s willingness to resume cooperation with the Fijian military.

Papua New Guinea to revise Manus Island refugee deal. Papua New Guinea’s prime minister, Peter O’Neill, said October 20 that his government will create a new plan to resettle refugees currently held at Australia’s detention center for asylum seekers on Manus Island. O’Neill said the current resettlement policy lacks public support. The government will launch a public awareness campaign and hold consultations with relevant stakeholders before revealing the new plan. Critics have charged that the governments of Australia and Papua New Guinea are taking too long to resettle asylum seekers held on Manus Island.

Nauru to regain access to frozen funds. An Australian court on October 22 dismissed a claim against the government of Nauru by U.S. fund management company Firebird Global Master Fund; the company had earlier secured a freeze on Nauru’s public funds, which are held in Australian banks, threatening the ability of the island’s government to provide public services. Firebird has been trying to recover $27 million it is owed by Nauru for government bonds issued in the late 1980s. The appeals court agreed with Nauru’s argument that as a sovereign nation it is immune to having its accounts frozen. Firebird said it will file another appeal.

Annual maritime surveillance exercise nets illegal fishers. Fisheries surveillance and enforcement staff from 15 Pacific Island nations plus Australia, France, New Zealand, and the United States took part in the annual Operation Kurukuru maritime surveillance exercise, resulting in the discovery of 12 vessels violating their fishing licenses. Kurukuru 2014 covered approximately 11.6 million square miles of the Pacific. Personnel and vessels worked together on round-the-clock surveillance, data analysis, reporting and information sharing, and enforcement operations.

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Looking Ahead

Global Security Forum 2014. CSIS will hold its annual Global Security Forum on November 12 with an opening keynote address by Deputy Secretary of Defense Robert Work. The day will feature eight breakout panel discussions in the morning and two afternoon plenary sessions, including a crisis simulation focused on Russia. The forum will take place from 8:00 a.m. to 3:30 p.m. at CSIS, 1616 Rhode Island Ave., NW. Click here to RSVP.

Strategic Asia book launch. The National Bureau of Asian Research will host a launch event on December 2 for the latest volume in its Strategic Asia series, Strategic Asia 2014-15: U.S. Alliances and Partnerships at the Center of Global Power. Evan Medeiros, special assistant to the president and senior director for Asian affairs on the National Security Council, will give a keynote address. The event will take place from 8:00 a.m. to 12:30 p.m. at the Naval Heritage Center, U.S. Navy Memorial, 1957 E St., NW. Click here to RSVP

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