The first half of the 1990s saw significant developments in the former Soviet and East European region: the attempted coup of August 1991 against Mikhail Gorbachev, the dissolution of the union, and the subsequent struggle in the 15 newly independent former republics to bring about significant social and economic change. There has been armed conflict in a series of these republics. In Russia there has been an armed attack on the parliament and its dissolution at the behest of the president, two national elections, simmering tension with a number of its neighbours, and continuing concern over the effects of economic reform, culminating in the December 1995 electoral success of the communist party. In Eastern Europe countries have been struggling with the legacy left by the communist regimes that collapsed in 1989. In a number of these countries communists returned to power via the ballot box. And, of course, the region was overshadowed by the breakup of Yugoslavia and the subsequent wars of Yugoslav succession. Despite this record of dramatic and important developments, this region has been of less concern to Australian foreign-policy makers than was the case during the Cold War.

Australians visiting Europe often complain about how little they see or hear of their own country in the European media. On the face of it, there is much to justify these reactions. It is exasperating to turn the pages of British newspapers and read the trivia they contain when one knows of the much more reportable, entertaining or significant stories they could print about other parts of the world. But is the situation much better when viewed in reverse? Are not the Australian media as guilty of parochialism when it comes to coverage of the outside world? The sad but very basic fact of the matter is that all politics are local politics. All of us who specialise in international affairs have been frustrated by the leverage of local issues on the attention of politicians, journalists, other academics and public opinion. We, when all is said and done, focus on issues such as whether certain countries will continue to exist, or whether the world will be at peace or war in months or years ahead. Sadly, these topics compete poorly with less vital topics such as the love lives of the Royal family or tales of petty corruption, both in Britain and in Australia.

Australia’s relationship with China is one of its most difficult and challenging: it constitutes a crucial test of the success of Australia’s ability to engage with the region in a way which gives full expression to its energy, initiative and unique identity. While relations have continued to be both cordial and mutually beneficial, and have matured considerably, two major developments in the post–Cold War era are likely to have an enduring impact on their long-term stability. At the international level, the end of ideological confrontation between the superpowers, and of the alliance system that buttressed it, refocused the political and economic attention of both China and Australia at the regional level. At that level, the most significant development, the emergence of China as a dominant economic and military power within a region that was itself shaping up as a financial and commercial powerhouse, opened up new windows of opportunity for Australia, while at the same time highlighting asymmetries in power between China and Australia, which had hitherto been disguised by a confluence of circumstances.

There were significant changes in the quality and direction of Australia’s relations with Southeast Asia between 1990 and 1995. These changes were symbolised by the new directions set out in Foreign Minister Gareth Evans’s statement on Australia’s Regional Security of December 19891 and at the end of the period by the signing of the Australia–Indonesia Security Agreement in December 1995. The signing of this agreement signalled a historic change in Australia’s relations with Indonesia and Southeast Asia, surprising observers in both countries. Yet the seeds of that agreement lie in the groundwork of the new approach to regional security set out by Evans in 1989, and in its antecedents in earlier ’moves to Asia’ of the 1970s and 1980s.

In the early 1990s it might have been expected that the Pacific islands region would fall off the Australian policy maker’s map. This seemed plausible given Canberra’s preoccupation with Asia and the end of the perceived security problem in the South Pacific. Instead, Australian decision makers embarked on an ambitious campaign to radically transform the regional economic order. The region was almost seen as part of Australia; ’the backyard’ that needed to be brought into line with Australia’s push into Asia and with Australia’s reform agenda in the face of new global economic pressures. This move was strongly influenced by an organisational initiative to place Pacific islands affairs and development assistance under a junior Minister. While some interpreted this as a downgrading of the area in Canberra’s foreign policy priorities, it had the effect of bringing more attention and energy to the relations with the Pacific islands than if they had been left in the Foreign Minister’s hands. Under the leadership of Gordon Bilney, the South Pacific returned to the priority list in Canberra, even engaging the Prime Minister from time to time.

In areas of environmental interest to Australia, the period between 1990 and 1995 was an active one internationally. It saw Antarctica formally protected from mining or oil drilling; enhancement of global cooperation to protect the ozone layer; a substantial rise in international, including regional, interest in global climate change; and, despite (perhaps, given the adverse international reaction, because of) the renewal of nuclear testing, particularly by France in the Pacific, the development of a comprehensive nuclear test ban treaty, on which Australia has put great emphasis. The five years also encompassed a second global environment conference, the UN Conference on the Environment and Development (UNCED), held in Rio de Janeiro in 1992 (the first, the UN Conference on the Human Environment, was held in Stockholm in 1972). The 1992 Rio conference can be seen in one sense as having been a valuable means of creating a greater awareness of the issues and increasing substantially the international machinery for dealing with co-operation in the environment field as well as spawning a variety of international conventions to which Australia adhered.

Writing at the beginning of the 1990s on Australia’s disarmament and arms control policies and achievements, Trevor Findlay noted that, although a relative latecomer to the field, Australia had soon become ’an assiduous, well-respected participant ... sporting a range of considered, often imaginative policies and initiatives’. In the main, however, these efforts and initiatives were concentrated in the international arena, with little cross-over into Australia’s domestic political domain. As Findlay described it: ’There is a sense in which Australia has so far tackled, and in most cases accomplished, all the "easy" arms control tasks – those initiatives which can be taken both unilaterally and with relatively little cost to Australia or the government.’ He further added that ’apart from its technical input in the CW area, the Defence Department has so far played only a minor role in shaping Australian disarmament policy,’ and speculated that ’[t]his could change as the international disarmament agenda broadens to include conventional and high-technology weapons that Defence has or plans to acquire’.

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.

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.

There is an extensive literature devoted to analysing the common features of the Four Dragons – Singapore, the Republic of Korea, Taiwan and Hong Kong. It is generally acknowledged that all emerged under authoritarian tutelage, although all are now experiencing pressures for democratisation; all prospered in a regional economic and security order underwritten by the United States, although one in which increasingly the United States is being displaced by Japan; all were the beneficiaries (although to an uneven degree and with uneven results) of a Confucian social inheritance. The approach taken by Australian policy makers to the Dragons is to a great extent a consequence of their rapid rise as major economic entities in the Western Pacific within the United States-dominated Pacific economy and security complex. Relations with the Dragons are relations with what, for Australians, is the vibrant Asia of rapid economic modernisation, as opposed to the timeless Asia of subsistence agriculture. The fact that these systems have ascended so rapidly is a particular test of each country’s capacity to engage with the region, given their relative lack of significance before the later 1980s.

Despite the recent focus on Asia, the relationship with the European Union (EU) has, between 1991 and 1995, remained very important to Australia in a number of ways. These have been years when the EU has established and maintained its place as Australia’s largest economic partner if investment is added to merchandise and service trade. The EU is the world’s largest trader, accounting for 20 per cent of world trade (as compared with the United States at 16.3 per cent, and Japan at 8.2 per cent). Further, the EU is the largest source of foreign direct investment (FDI) and one of Australia’s largest partners in trade in goods and services. For the EU, Australia is a growing market and provider of direct foreign investment and a potential base for EU companies in the Asia-Pacific region.

The defence policies of many countries in the world are in disarray. With the end of the Cold War, the United States and its NATO allies, as well as Russia and former members of the Warsaw Pact, are having great difficulties justifying their large defence forces. As a result, defence budgets are being slashed and force structures are being reoriented away from nuclear conflict and major conventional war. In Asia, however, strong economic growth is sustaining the largest increase in defence spending of any area of the world. This is taking place even though most countries in Asia face no palpable threat. Furthermore, few countries in the region have set out in the public domain reasoned arguments for their defence-force acquisitions. As a close ally of the United States and as an important regional power, how does Australia’s defence policy fit into these two divergent trends? Has Australia’s defence policy changed radically since the end of the Cold War? What about Australia’s economic and political engagement with Asia? Has it led to less anxiety in official circles about potential military threats from the north and has this resulted in any changes to the force structure?

At the end of 1995, the global economic environment appeared far more favourable to Australia than at the beginning of the decade. The worst fears of the early 1990s had failed to materialise. The Uruguay Round of negotiations in the General Agreement on Tariffs and Trade (GATT) had been concluded and GATT’s successor, the World Trade Organisation (WTO), established. With a successful outcome to the GATT negotiations, the threat of the global-trading system fragmenting into rival regional trading blocs largely receded. The establishment of the Single Internal Market in 1992 and the conversion of the European Community into the European Union with the Maastricht Treaty of the following year came and went with no evidence of adverse impact on its trading partners: ’Fortress Europe’ did not eventuate. Even agriculture, very much the orphan child of the world community’s postwar moves towards liberalised trade, was brought under WTO auspices; the requirement that barriers protecting agriculture be converted into tariffs by the end of the century promises to bring greater transparency in agricultural trade and, with it, the possibility of more effective pressure for liberalisation.

The extent to which Australian foreign policy was reoriented between 1991 and 1995 is evident from an examination of the last edition of Australia in World Affairs. In the 1980s, the Soviet Union still loomed large in world affairs; the alliance with the United States correspondingly remained central to Australian foreign policy. Efforts by the Hawke Government to engage more closely with Asia in these years had frequently been rebuffed, so that Fedor Mediansky was able to write at the end of the decade not of closer engagement with the region, but of ’Australia’s diminished regional standing’. Australia’s ’shift towards Asia’ gathered momentum in the first half of the 1990s. Some important foundations for this trend were laid in the later 1980s, especially in immigration patterns, trade and tourism. The desirability of this shift was articulated in a range of official reports and statements, including the Fitzgerald Report on immigration, the Garnaut Report on Australia’s relations with Northeast Asia, and the Foreign Minister’s statement Australia’s Regional Security, all produced before the collapse of the Soviet Union and the definitive ending of the Cold War.

Beginning with the floating of the Thai baht on 2 July 1997, a regional crisis unfolded that saw the magic disappear from the economies of East Asia. What appeared initially to be merely the sharp devaluation of a single currency turned into an economic free-fall that rippled across neighbouring economies and eventually the entire region. By early September 1997, the Malaysian ringgit had fallen to its lowest level against the US dollar since 1971; in the space of six months the Thai stock-market had lost 38 per cent of its value; Malaysia’s lost 44 per cent, the Philippines’ lost 35 per cent; Indonesia’s lost 17 per cent; and Japan’s lost 4 per cent. By year’s end, the Indonesian and South Korean economies had been brought to their knees, and speculation had begun that East Asia would drag the global economy into a bout of chronic deflation.

The trans-Tasman relationship matured in the 1990s as Australia and New Zealand assumed somewhat more distinct identities, while simultaneously forging a closer partnership on the periphery of the Asia-Pacific region. No one in New Zealand pretends that the relationship with Australia is one of equals. Each is a central but asymmetrical priority for the other in economic, trade, foreign and security policies. The momentous global changes of the 1990s affected the two countries in similar ways and produced many similar responses. Along with the abatement of the Soviet threat from Southeast and North Asia, this gave rise to some fears of the retrenchment of the United States from Asia and to a resulting instability in Asia. Australian and New Zealand concerns therefore focused more sharply on the creation of structures of confidence building and security dialogues in the Asia-Pacific region. Yet New Zealand’s geopolitical distance from Asia relative to that of Australia, as well as New Zealand’s dissociation from the Australia, New Zealand and United States (ANZUS) security alliance for fears of nuclear contamination, took Canberra and Wellington along some separate defence paths.

Australia’s relationships with the United States and the wider North American region were redefined in the era of intense international change following the Cold War and short-lived optimism about the so-called ’new world order’. The rise of the Asia-Pacific region as the dominant centre of global economic activities, along with the more fluid international environment that displaced the Cold War, reshaped the external policies and aspirations of both Australia and the United States. But these broad forces had very differential effects on the two states. Australia found increased political and economic latitude in the altered Asia-Pacific environment. In contrast, the United States adjusted uneasily to its declining status as the global hegemon, and found the promise of the post–Cold War world difficult to identify or manage. The long-dominant authority of the United States was compromised by the uncertainties of a more decentralised international environment. This change reduced Australia’s deference to its powerful Pacific ally, and permitted the Keating Government to exercise greater autonomy in pressing its separate interests abroad, especially in the economic arena.

An extraordinary development occurred in the Australian economy in the last quarter of 2008: for the first time since the first half of 1991, gross domestic product (GDP) declined. But even more extraordinarily – and despite the then Prime Minister Kevin Rudd’s assertion that ‘the worst global economic recession in 75 years means it is inevitable that Australia too will be dragged into recession’ – data for the first quarter of 2009 showed that the economy had resumed growth. Among the countries of the Organisation for Economic Co-operation and Development, Australia alone avoided recession as conventionally defined (two consecutive quarters of negative growth in GDP).