Peter Varghese
Peter Varghese

Peter Varghese AO

Peter Varghese AO, Foreign Secretary (Australia) and former High Commissioner to India in New Delhi shares his thoughts on India, Australia’s engagement with the Asian countries and reflects on why cricket isn’t an American sport

The interests of India and Australia converge like never before, driven by trade complementarities, rising investments, common geo-strategic outlooks and closer multilateral cooperation. What are the opportunities you see?

For the first four decades of India’s post-independence history, Australia and India had limited relations. Economically, our paths rarely crossed. Multilaterally, we were more often than not on opposite sides of the table. All that began to change in the early nineties with India’s historic decision to open its economy. That change began a process of transition for India’s world outlook. The continuation of that process will increasingly bring our two countries closer together. That is the headline story of Australia-India relations: our interests are converging, providing an opportunity to build our strategic partnership established in 2009. Australia is well placed to supply the energy and resources India needs for development, and the education services it needs to train its growing workforce. There are also opportunities in the financial services sector, health and agri-business.

Underlying the strength of our relationship with India is a shared commitment to democracy, human rights and the rule of law.

How do you value the economic and social benefit of people movement? Given Australia’s ageing population and India’s demographic dividend, won’t you see an extended skilled migration programme will benefit both countries significantly?

Globally, people mobility is on the rise. Progressively larger migration flows are driven by demographic differentials between migrant source and destination countries. The International Organization for Migration (IOM) states that in 2010 there were 214 million migrants in the world, and that this number could rise to around 405 million by 2050. Both migrant source and destination countries like Australia have the potential to benefit from this phenomenon.

As the developing world’s middle class swells in countries like India, increasingly large numbers of people will be able to access higher education and training and have the ability to travel in search of better pay and conditions. This huge mobile workforce will help provide the labour required for the world’s economic growth, including Australia in the coming decades.

The surplus labour force in countries like India and China will mean these countries will continue to be a source of skilled migrants to countries such as Australia.

From an Australian perspective, as the labour force is projected to contract in the future, migration can help offset the impact of the ageing population. Australia’s economic success will partly depend on the extent to which its immigration programmes are managed to respond to Australia’s economic needs, both in the immediate and the longer term. Australia needs migrants to supplement the labour force in key areas where skill shortages exist and our programmes aim to ensure that migration brings benefits to Australia by meeting a growing demand for skilled labour.

For India, I would say skilled migration programme arrangements are working well. In the last financial year, India was Australia’s largest source of permanent migrants, and comprised a total of 29,018 places (or 15.7%) of the permanent migration programme. The Indian community has made a valuable contribution to economic, social and cultural life in Australia, and this will continue as more Indians migrate permanently to Australia.

What are the diplomatic goals and objectives (vis-à-vis India and EAS) you have lined up in your first year as Foreign Secretary? Are these based on objectives of the Asian Century White Paper? And, are these meant to deliver, at least some of them, by the time the Federal Elections comes up later this year (2013)?

Over this century, we can expect India to become a more important player in the security of Asia. Today, it makes more sense to think of the Indo-Pacific, rather than the Asia Pacific, as the focus of Australian security. This broader definition returns India to Asia’s strategic matrix. It connects the Indian and Pacific Oceans, thereby underlining the crucial role that the maritime environment is likely to play in our future strategic and defence planning.

The Indo-Pacific represents the centre of gravity of Australia’s economic and strategic interests. It includes our top nine trading partners. It embraces our key strategic ally, the US, as well as our largest trading partner, China. It reinforces India’s role as a strategic partner for Australia and it brings in the big Asian economies of Japan, Korea, Indonesia and Vietnam, as well as the diplomatic and trade weight of ASEAN.

This new construct of the Indo-Pacific neatly matches the recently expanded East Asian Summit (EAS). And it sets the scene to make the EAS the premier regional institution potentially capable of addressing both the strategic and economic challenges facing the Indo-Pacific region.

What in your view would be central to the bilateral trade relationship in the coming years? What are the challenges you see in building a closer Indo-Australian relationship and diplomatic challenges in particular?

Bilateral trade is a key pillar of Australia’s relationship with India. Trade has grown over 20 percent over the past ten years, and currently stands at around A$18 billion. The investment relationship has also expanded significantly, with the total stock of Indian investment in India reaching A$11 billion in 2011. Australian firms are showing increasing interest in investing in India, particularly as the Indian Government undertakes further reform. Our highest priority remains the conclusion of a high quality, comprehensive and liberalising Comprehensive Economic Cooperation Agreement (CECA) with India. The successful conclusion of negotiations will lead to greater trade and investment opportunities for both sides, enhancing people to people links and the broader bilateral relationship.

The Australia-India CEO Forum is another important avenue to deepen our trade and investment links. Through the Forum, Australian and Indian CEOs meet regularly to discuss barriers to trade and investment and identify opportunities for further collaboration. We are also keen to work more closely with India at the regional level, including on the recently announced Regional Comprehensive Economic Partnership negotiations, and multilaterally at the WTO.

The Asian Century White Paper stirred considerable discussion in Australia, but back in India, not much has been said about it publicly. Do you think the objectives and purpose expressed in the study could be met? Some also deem the reference of the “rise of the middle class” as an expression of the “business opportunity” that Australia could use. Do you support that view?

The White Paper puts India in the top rank of Australia’s partnerships. It recognises that Australia’s future is tied to the continued prosperity, sustainability and stability of our region. It highlights the importance of Australia having stronger and more comprehensive relationships with countries across the region.

Through the White Paper, the Australian Government commits that all Australian students will have the opportunity, and be encouraged, to study an Asian language throughout their years of schooling. All students will have access to at least one priority Asian language; these will be Chinese (Mandarin), Hindi, Indonesian and Japanese.

The commitment to greater teaching of Hindi was well received in India.

What initiatives does Australia intend upon to deepen its security collaboration with India?

Australia and India have a shared neighbourhood and shared interests. Discussions between our Foreign Ministers recently touched on support for Afghanistan; maritime security in the Indian Ocean; joint efforts to combat terrorism; and an agreement to an expanded bilateral dialogue on cyber policy. We are also seeking to grow our defence relationship; in particular, we are working towards formalising a bilateral maritime exercise. We also intend to continue regular senior strategic dialogue, and look forward to a visit by Indian Defence Minister AK Antony to Australia this year.

Despite globally-praised Australian expertise and brands in the services sector Australia has not quite capitalised on this. How do you intend to change that?

Services trade between Australia and India is dominated by education exports. India is the second largest source of international students in Australia. There are also growing opportunities for vocational education and training to be delivered by Australian institutions here in India. Financial services is another priority area. All four of the major Australian banks now have branches in India. Tourism is another growth sector with over 150,000 Indian visitors travelling to Australia last year.

You have mentioned earlier that geopolitically, Australia would like to build the East Asia Summit (EAS) into a regional institution. What are the steps taken in that direction until now? Do you think Asia will invest its hopes and trust in the EAS as the only institution that could deal with big issues in an integrated manner?

The East Asia Summit (EAS) is the only leaders’ forum in the Asia-Pacific with the mandate to address the full range of political, economic and security challenges confronting the region. The 2011 decision to expand its membership to include the United States and Russia has ensured that we now have the right countries at the table for the EAS to take a central role in regional efforts to promote peace, stability and prosperity. Since 2011, we have seen a series of useful leaders’ discussions on political and security issues, such as maritime security and the South China Sea, the Korean peninsula and non-proliferation. There has also been a range of important practical cooperation initiatives launched under the EAS in the areas of finance, energy, education, environment, disaster management and connectivity. Australia welcomed India’s EAS initiative to rebuild the Nalanda University and its recent hosting of an EAS workshop on earthquake disaster management. We also hope to work more closely with India on finance, education and connectivity.

As Indian Diaspora is one of the largest and fastest growing communities in Australia, how do you see the scope for capitalising on societal links to strengthen political and business ties between the two countries?

Australia’s diverse Indian communities are currently estimated to number around 450,000. With India currently Australia’s largest source of permanent migrants, the people-to-people linkages will continue to grow between our two countries. The 2011 census also showed Punjabi was the fastest growing language in Australia while Hinduism was the fastest growing religion. Indian Australians are making a significant contribution to Australia in all areas including business, sports, politics and academia. The growth of these people and community linkages will add further strength to our bilateral relationship – through greater and closer bilateral government cooperation and business between our two countries.

Canberra is to take charge of the IOR-ARC in 2013, and an India-Australia-Indonesia trilateral is one of the early deliverables. This new engagement is indicative of a stand to hedge against possible Chinese expansionism. Is this so? Is Australia’s China policy skewed to focus overwhelmingly on the economic and also reflective of US-China policy? Does this affect Australia’s Indo-Pacific outlook?

No, I do not think so. Nothing IOR-ARC says or does is directed against China. In fact, China is a valued dialogue partner in IOR-ARC and has contributed financial resources to the IOR-ARC Special Fund. The ‘India-Australia-Indonesia’ trilateral you refer to is the IOR-ARC Troika mechanism - of past, present and future IOR-ARC Chairs. This will occur when Australia takes up its position as Chair, and Indonesia as Vice-Chair, for two years from November 2013.

Do you think any substantial improvement in Indo-US relationship will push Australia into a marginal player?

No. The United States and Australia have different strengths and different areas of expertise. We’re not expecting the United States to take up cricket.

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