The Australian economy performed surprisingly strongly throughout most of the five-year period under consideration. The performance was surprising, that is, given the troubles – concentrated in the years 1997–99 – that afflicted most East Asian economies, which together account for more than half of Australia’s exports. By the end of the five-year period, however, the triumphalism that had accompanied Australian official reaction to the Asian economic crisis began to look premature. In 1999–2000, the government had to apply the brakes (in the form of higher interest rates) to the economy largely because of external constraints: a worsening current account deficit and a depreciating currency. The economy was showing all-too-familiar signs of the stop–go pattern that had choked off growth in earlier periods. Fears were mounting that the economic growth that had occurred throughout the period – the country’s longest boom since the 1960s – was drawing to an end.

Asylum seekers, the war in Iraq, and the threat of terrorism dominated foreign policy in the first years of the twenty-first century not only in the political arena but also in the polls. Not since the 1980s and the debate about Asian immigrants had questions of immigration loomed so large; not since the Vietnam War had the deployment of Australian troops in a US-led invasion of a distant land proved so divisive; and never before had Australia had to grapple with the threat of international terrorism. Border protection and terrorism figured prominently in the run-up to the 2001 election; security issues and, to a lesser extent, the war in Iraq were factors in the election held in 2004.

Over the last quarter-century, the relations between Australia and Latin America, while not intense, clearly have thickened and deepened. And the pace of this thickening and deepening is quickening. The most obvious manifestation is in the economic realm, in trade and investment. But our research indicates that in more obscure areas, such as cultural exchange, education, and environmental issues, much is happening and there is every reason to expect that the contact will expand. That said, any informed observer of Australia’s relations with Latin America would be struck by how little each knows about the other, how recent and relatively superficial the contacts are, and consequently how tenuous they could remain unless both the Australians and the Latin Americans invest further substantial effort. This effort cannot be limited to the material – trade and investment – but must include education at all levels to overcome the barriers of language and culture, of limited transport, of competing economies, of stereotypes.

In a remarkable article published in the official journal of the Japanese Ministry of Foreign Affairs in December 1992, the Director-General of the Economic Affairs Bureau and one of the most senior figures in the Ministry, Kazuo Ogura, wrote in an analysis of Japan’s diplomacy that only Australia could fill the role of Japan’s real partner in an Asian-Pacific regional alliance: their similar democratic values, market economies and approach to free trade, and common interests in security and political matters, gave the two countries a firm basis for a continuing and closer partnership. This view was warmly endorsed by Australia’s Foreign Minister, Gareth Evans, as echoing his own remarks about Australia being a natural ally of Japan, and was enthusiastically taken up by the Australian press in terms of the opportunity and challenge presented to Australia.

During the early 1990s Australians reviewed their relationship to Asia not only in economic and strategic terms, but also in a broad cultural context. In a sense, Australian identity had always been defined in relation to Asia. The European settlers were aware of their remoteness from the old world and their proximity to people who seemed different to them in exotic and sometimes threatening ways. The ideal of ’White Australia’ had announced a determination to develop an Australian society independently of the new national societies being formed elsewhere in the region. The so-called ’multicultural’ Australia, promoted in the 1970s and 1980s, made claims to be inclusive of non-Western cultures – yet the underpinning ideology was derived from elements of Western liberalism. In the late 1980s and early 1990s, some Australians began to think of their country in different terms again, asking whether it might be possible to consider Australia as in some sense ’Asian’. By 1996, a consensus appeared to emerge to the effect that, although Australians ought to engage vigorously with Asian societies, Australia itself could not convincingly be described as an ’Asian’ country.

In its annual poll for 2010, the Lowy Institute for International Policy included public opinion data under the heading of the ‘Rudd government’s foreign policy report card’. Asked about its performance across a range of issues, those polled gave their highest mark for the Rudd government’s management of the alliance with the United States (7/10), but only 6/10 for the government’s response to the global economic crisis, a mere 5/10 for combating climate change, and a lowly 4/10 for dealing with Japanese whaling. It must have been slightly unnerving for the government that these issues were precisely those that Kevin Rudd had identified as clear-cut successes in the area of foreign policy. More broadly, the increasingly widespread perception that the Rudd government’s management of foreign policy was indifferent at best posed problems, because it was the one policy area in which Rudd himself could claim particular professional expertise. If the government was unable to point to a record of unequivocal successes in the Prime Minister’s own specialist domain, it raised questions about its capacity to deliver on other fronts as well.

During the first five years of the twenty-first century the Howard Government took on a more activist role in the South Pacific. This trend was influenced by the ‘war on terror’, particularly the Bali bombings, which struck home in a manner that the 11 September attacks could not, but it also firmly reflected policy orthodoxies. This is not to say that responding to terrorism closer to home has not become a justification for intervention in the region, but it must be acknowledged that declaratory policy was not always matched by operational realities. The ‘war on terror’ opened up the political space in which increased intervention in the South Pacific could be undertaken, but events within the region itself were the central factor contributing to intervention. In particular, domestic crises in Solomon Islands and Papua New Guinea, and to a lesser extent Nauru, presented major challenges for Australia, and the creation and maintenance of an environment conducive to intervention was a significant foreign policy shift by the government.