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Transcript

BLAMEY ORATION A DECADE IN TRANSITION

A presentation to the Royal United Services Institute of Victoria
26 May 2005
by Major General John Hartley AO Rtd
National President, RUSI of Australia

When we look back on this decade, the first in the twenty-first century, I believe we will clearly see ourselves in a period of transition. We are well clear of the Cold War era. Where before much of the world was divided between two competing ideologies, each with a similar strategic doctrine, appropriately termed MAD (Mutually Assured Destruction), we have moved into a post-cold war era without any defining title.

A highlight of this period is obviously the war against terror, launched so dramatically on September 11th. The subsequent destruction of the Taliban in Afghanistan and the continued occupation of Iraq are direct outcomes. But even now, Washington is beginning to turn its attention to other matters, while acknowledging that the war against militant Islamism will continue at a high level for a long time to come.

While any judgement about the future is fraught with uncertainty, there are a number of developments, several of which have started, that will attract our attention over the next ten years. I should like to speak to three in particular which, I believe, do not get much coverage in the mainstream media, partly because they are difficult to define and partly because they are not headline material at this time.

I should like to speak briefly on the following:

Islam: Uncertainty and renewal

In 1993, author and political philosopher Samual Huntington caused much debate in the media, among academics and government officials with the publication of his paper The Clash of Civilisations.

His contention was that while nation states would remain the most powerful actors in world affairs, future conflict would not be between nation states but between civilisations. In other words, the battle lines of future conflict would be cultural.

Most academic and western governments publicly rejected Huntington's argument. But many in the Islamic world believe that a fundamental conflict between Islam and the West is occurring. Western governments, on the other hand, are at pains to point the finger at Islamists, that is those Muslims who view Islam as an ideology rather than a religion. Thus the West attempts to replace Huntington's clash of civilisations with an old fashioned clash of ideologies. It is as if the communist reds have been replaced by the Islamic greens. This has allowed President George Bush to declare that September 11th was driven by the terrorists' "abhorrence of democracy". Even our own White Paper on terrorism argues that the ideology of terrorism lies at the heart of the threat facing the world.

Of course, there is some justification for this. Recent acts of terrorism have given Islamism a global dimension. Terrorist networks that appear to be in ideological allegiance to al-Qaeda may have established worldwide operational linkages. Islamists themselves are quick to contribute to this perception.

But we need to be very careful that we do not see Islamism as a monolithic ideological movement spreading from its putative centre, the Middle East, and encompassing all Muslim countries. Indeed, most of today's Muslims no longer live in the Middle East. While figures vary, only 350 to 380 million of the world's 1.2 to 1.5 billion Muslims are found in the region.

So what is Islamism? Traditionally, it has been defined as Islam conceived as an ideology. Those who adhere to it see Islam as encompassing everything in society; from the way it is governed, to its education and legal systems, to its culture and economy. For Islamists, a truly Islamic society - a just, prosperous and strong one - does not simply consist of pious Muslims but requires an Islamic state or system.

But Islamists also differ as to what this means in practice. For Ayatollah Khomeini, for example, an Islamic state implies clerical rule while other Islamists envisage a much more circumscribed role for the clergy. Having said that, Islamists generally agree that an Islamist state is not based on secular rule or a complete separation of state and religion.

Another key element, over which there is considerable dissention, is the level of activism to be employed. This can range from preaching and teaching to terrorism. It can also be reflected in a decision to form political parties and participation in parliamentary elections.

Three further conclusions can be drawn:

But the majority of Muslims share a common concern: how can a Muslim world in decline both defend against and absorb the advances being made in the West in such diverse areas as law, industry, the economy and military technology but still remain true to its own unique society, culture and beliefs? The answer clearly lies in the revival and reform of Islam.

At the expense of being overly simplistic, I believe there are two broad approaches being taken: firstly, one that essentially is political and accommodates the state; and secondly, one that has a radical jihadist approach.

By the mid-1990s Islamists were confronting failure, particularly in Egypt and Algeria and had publicly called for a halt to armed attacks. In part this was the result of government repression although the escalation of violence, especially in Egypt, had alienated many ordinary Egyptians. Younger members also began to agitate for change. They had grown impatient with the slow and more religiously oriented actions of their elders. They advocated a more overtly political though still non-violent approach, including the establishment of political parties. Some even promoted the idea of an Islamic democracy and have distinguished between Islam as a religion, which excludes non-Muslims, and Islam as a political entity that includes all members, including non-Muslims. People of this persuasion call for democratic elections, advocate the rights of minorities and attempt to reconcile sharia with parliamentary rule.

An example, and one not lost on Islamist movements, is the Justice and Development Party in Turkey that is in power today. Islamist parties have also entered parliaments in Jordan, Kuwait, Bahrain and Algeria. These have been referred to as liberalising autocracies. Of course, none of this is to suggest that violence has been irrevocably abandoned, particularly if avenues of political expression remain closed or limited.

Now the group I have just described is reconciled essentially with a state or nationalist approach. Others, however, who still do not advocate violence, see the ideal political outcome as the restoration of an Islamic caliphate that would see the creation of a super Islamist state. The use of the mass media has been particularly powerful in this regard.

I now turn to the radical groups that have moved into organised terrorism. Again there are probably two groups: that characterised by al-Qaeda that seeks to engage the 'far enemy' (that is the US and its allies) and those who oppose the 'near enemy' (that is the autocratic rulers of Muslim states). Increasingly, I suspect, these distinctions are being blurred, and many previously regional or national based groups are prepared to support other, like-minded groups.

Al-Qaeda increasingly looks like an ideology rather than a coherent movement. Even this description may add more coherence than al-Qaeda deserves. Recent utterances reflect little more than fervent anti-American and Western statements and anti-Semitism, all apparently justifying a perpetual jihad. Indeed, in some ways, the jihad appears to be an end in itself.

But there is also a political and opportunistic dimension to al-Qaeda's rhetoric. It attempts to represent conflicts involving Moslems around the world into a vision of a clash of civilisations and to promote international angst towards the US and the West.

This is illustrated by the way bin Laden's statements have evolved over the years. In the original 1998 statement, bin Laden's main focus was the Middle East. In particular, he highlights several issues: the 'occupation' by US troops of Islam's holiest land, Saudi Arabia; the devastation inflicted upon Iraq both during, and as a result of sanctions after, the 1991 Gulf War; and US support for Israel. But reflecting al-Qaeda's transnational horizons, these soon expanded to more global concerns. By 2002, in his 'letter to America', bin Laden had included the Palestinian cause in his complaints against the US. He also added to the list Russian atrocities in Chechnya, Indian oppression in Kashmir and US support for the Philippine government against its Muslim minority. He even cited the Bush administration's refusal to sign the Kyoto Treaty as evidence of how US companies were destroying the world's environment. Australia has also received a mention in earlier pronouncements for its alleged role in helping East Timor 'secede' from Indonesia.

Now what do I draw from all of this? Firstly Islam is severely divided by how it is to reconcile its faith with future global directions. And secondly, most importantly, we in the West must avoid seeing Islam as monolithic terrorist movement bent on the destruction of the West by violent means. While many may adopt and Islamist approach, only a small minority accept the use of al-Qaeda style violence. But if we persist in seeing every Muslim, especially those with Islamist tendencies, as a member of an al-Qaeda type organization, then we will increasingly drive even larger numbers in that direction.

Let me say a few words about the war against al-Qaeda.

It is difficult to gauge the effectiveness of this campaign but there is a growing sense that al-Qaeda has been unable to replace its losses since the occupation of its base in Afghanistan. There has been no major incident since the Madrid train bombing, over a year ago, and a number of countries, that previously remained uncommitted, have decisively sought to counter al-Qaeda's influence.

Saudi Arabia, for instance, not only appears to have contained al-Qaeda's militancy but has recently taken the offensive. Perhaps more significantly, the kingdom's religious establishment, long viewed as having divided loyalties, has recently spoken out against the 'jihadist' movement. As a result, al-Qaeda has shifted some of its operational focus to Kuwait and Qatar and may even seek to operate in the UAE and return toYemen.

Al-Qaeda has only been able to operate with some success in Iraq. But even here, al-Qaeda has essentially coopted a regional group that is headed by al-Zarqawi who has warned of a race against time. Indeed, the recently returned commander of the US 1st Cavalry Division, whose prime responsibility was the security of Baghdad, made the interesting observation that bin Laden's reference to al-Zarqawi as the 'prince of Iraq' drew an instant negative reaction from many Iraqis who heard a Saudi telling a Jordanian to kill Iraqis.

Some have suggested that the war in Iraq, like the Soviet conflict in Afghanistan, has become a breeding ground for the next generation of Islamist militants. While there are similarities - the convergence of Arab and Muslim fighters and the presence of Islamist extremists - there are also significant differences.

In Afghanistan the majority of the populace opposed Soviet efforts to prop up an Afghan Marxist regime. In Iraq, while many wish to see the end of the occupation, a majority of Shia and Kurds, and a significant number of Sunnis, support the new US-backed government.

Nor has the Iraqi conflict attracted nearly as many foreign fighters as Afghanistan did. Nor does the majority of Sunnis subscribe to al-Zarqawi's extreme Wahhabist ideology.

There is also an argument that the push for democratisation will reduce the attractiveness of militant action in the long term. Many people in the Middle East have no love for their authoritarian regimes and external demands for democracy probably mesh with internal desires for greater freedom and self-determination.

A fear lingers in the West, however, that a truly democratic protest could allow radical anti-Western, and particularly anti-US, groups to gain power. While it is early days to make this judgement, there is evidence that conservative and even Islamist forces, which wield much greater influence than the jihadists, moderate their stance as they assume political responsibilities. This has happened in Turkey and to a lesser extent in Iran and Pakistan. In other words, the democratisation of states, where significant Islamist movements make respectable showings in elections, may also lead to a moderating influence on Islamist ideologues.

Russia: the Beginning of the End?

Russia is at something of a crossroads. A number of contradictory forces are present that threaten its very make up. How the Kremlin deals with this, and how these events pan out, will dominate headlines in the decade ahead.

Let me highlight some emerging trends.

Let me speak briefly to this last issue because, if these groups succeed, they could mark the end of the Russian Federation.

Disparate groups - pro-Western liberals, anti-Russian nationalists, Islamists and crime syndicates - will try to lead or manipulate these revolutions and use them to their advantage while making temporary alliances among themselves.

The frequency of demonstrations in non-ethnic Russian areas has steadily increased in recent months. Many of these regions enjoy some autonomy and would require fewer steps to break from Moscow than ethnic Russian areas where displeasure with the Kremlin is also growing. Moscow's influence among non-Russian republics is weaker than elsewhere because many of the local population feel more bound to their ethnic and religious groups than to Moscow.

Protesters also are emboldened by the success of recent 'popular' revolutions in nearby former Soviet republics. Indeed, protesters no longer fear reprisals by the Russian government because Moscow's response to recent demonstrations has been docile, with no arrests or harsh penalties for opposition leaders.

Opposition groups also see support from abroad. President Bush, for instance, openly promotes democratic reform to advance his administration's international goals. Western NGOs, such as the US Republican Party's Freedom House and the Seros Foundation, help opposition groups with planning and organise seminars on how to lead protests and train activists and provide financial support.

There is, of course, nothing new in this. Britain gave money, arms and provided military instructors to Caucasian and central Asian tribes during the nineteenth century. The entente did the same for non-Russian nationalist movements during the October Revolution of the 1920s and Adolph Hitler's Germany raised whole divisions of non-ethnic Russians unhappy with Moscow's rule.

Nor, in present conditions, do the number of protesters need to be particularly large. In Kyrgyzstan, for instance, it required only 2,000 to 3,000 demonstrators to break in and occupy the central government offices to start the process to displace the government.

Let me turn to some specific examples, recognising that there has been little Western media coverage of the issues.

One of the latest cases involves the autonomous Russian Federation of Bashkortostan, which is located in the southern Urals between the European and Asian parts of Russia. The only strategic main highway from Russia's east to its west runs through the republic, as do several major energy pipelines, linking western Siberia to western Europe. The republic also is rich in oil and natural gas and has the largest oil-processing centre in Russia.

Bashkortostan's separatist, anti-Moscow tendencies began with Gorbachev's perestroika and continued with President Yeltsin. Though Russians have long been the dominant ethnic group, accounting for some 39 percent of the four million strong population, Bashkirs, who represent 22 percent of the population, moved quickly - either by threat of force or through clan connections - to remove Russian officials from almost all key government positions. Neither Gorbachev nor Yeltsin intervened; they allowed moderate anti-Russian nationalists to come to power to avoid the more dangerous threat of radical nationalists.

Moscow also feared the rise of Islamism in the republic. A majority of the population - Bashkirs and Tartars - is Muslim. Some radical elements have preached revolution and founded several cells. Dozens of young men have gone to fight the Russians in Chechnya.

In March, some 20,000 demonstrators gathered in the capital Ufa to demand the resignation of the moderate president who had sought and received more independence from Moscow. But radical elements, encouraged by the timidity of Putin's response, now believe it may be possible to extract Bashkortostan from the Russian Federation, especially with the West providing political and financial support.

If the present process continues, and is not checked by the Russian government, then the prospect of a velvet revolution in Russia proper becomes a very real outcome. Such an outcome would be more dangerous to Moscow than the Chechnyan war.

Nor is Bashkorostan an isolated case. Similar and even larger so-called revolutions are being contemplated in neighbouring Tartarstan, Yakutia and Tuva in Siberia, Karelia in the northwest, Kalmykia in the lower Volga region and several republics in the North Caucasus.

Take Tartarstan, which is perhaps the most important of these potential breakaway regions. It sits between Moscow and the Urals, has a developed oil sector and is the main base for Russian heavy industry.

Tartars are also the most politically influential ethnic minority in Russia. Only about a quarter of them live in Tartarstan. They hold senior positions in government, the economic sector and within the security forces. Tartar oligarchs are second - albeit a distant second - to Jewish oligarchs amongst Russia's elite. The Tartar lobby in the Kremlin and Tartar mafias in Moscow and the Tartar capital Kazan are among the strongest in the country. Tartarstan is closest to independence of any republic within the Russian Federation.

Separatism and, to a lesser extent, Islamism have developed strongly among the Tartars since perestroika. The current president is a moderate nationalist and, despite the fact that the republic is drifting away from the Kremlin, Putin dare not replace him because those who might follow would be even more radical.

Let me briefly mention Yukutia, Russia's largest region that occupies one-fifth of the country. This, of course, is the area of eastern Siberia, rich in gold and diamonds.

Yukutia saw violent anti-Russian separatist demonstrations under Gorbachev, with ethnic Russians killed on the streets of the capital in the late 1980s. The separatist movement is still alive and western NGOs are actively trying to unite the opposition, at least according to Yukut government sources.

These and other examples have yet to result in a substantial shift in authority in the republics, but the likelihood of such an outcome is quickly gaining momentum. It is clear that the destabilizing forces of these revolutions are entering Russia proper and, unless Moscow moves quickly to deal with these well-organised, Western-supported and increasingly active protests, Russia could start to see its territory slip away, piece by piece.

China: a faltering economic miracle?

Turning now to northeast Asia, we have seen a considerable increase in tension in recent months, particularly between China and Japan. North Korea's nuclear blackmail, Taiwan's games and America's involvement have all contributed. But there is another problem emerging that gets little coverage from the mainstream media and yet has the potential to be the most destabilising issue.

A number of economists are starting to believe that the Chinese economic miracle is faltering. This is the result of a complex mix of political and economic factors that cannot be changed without serious harm to the communist-run system. Pressures are being generated by cheap finance, guaranteed employment and state-financed and owned industry. A number of crises will erupt between now and the end of 2006.

Under the Chinese model, Beijing guarantees Chinese companies with generous loans and repayment options. This works well provided this process is restricted to China. But coastal industries have now been exposed to foreign investment for about 20 years. Thus some Chinese companies have become vulnerable to debt crunches in the same way that western companies are affected. Furthermore, inefficient practice and widespread corruption have resulted in overproduction that threatens to swamp the economy with unneeded goods.

Starting March 2004, the Chinese government began to reign in its spiralling growth. But some sectors can only survive if they continue to receive infusions of cheap money and this inevitably requires additional growth. As a result, in 2004, international debt rose by over 18 percent to over $300 billion. And because many of the loans were high-interest and short term, nearly half has to be repaid within 12 months.

A further complication is that China has pegged its currency to the US dollar whose interest rates have tripled in the last nine months, thus adding to the problem of debt settlement.

The second industry group is based on state-owned enterprises (SOEs) that primarily service the domestic economy and are of far greater concern to the average citizen. They, too, feed on cheap money. But while the import/export coastal industries have some foreign connection, the SOEs have almost none.

Their main purpose is not so much to produce goods as to provide employment for about 40 percent of China's urban population. This is China's social safety valve and, by comparison, the coastal businesses are paragons of financial virtue.

The SOEs are shoddily run, report only to their political masters and were never intended to be profitable. They are financed through state banks that are arms of government policy.

The banks in turn suck up the capital from China's absurdly high savings rate, grant minimal interest to depositors and, at government direction, shovel money to the SOEs. Since the SOEs are quarantined from the international system there has been little incentive to change.

But China joined the World Trade Organisation and Beijing agreed to open up the Chinese economy to foreign competition. Banking will be one of the final sectors to be liberalised.

Now what does this mean? By about December 2006, the state banks will start to decline. As soon as foreign banks can compete freely, they will begin to attract Chinese savings because, unburdened by unprofitable SOEs, they can pay far higher interest rates. As a result, the state banks will no longer have the resources to sustain the SOEs and the government will be forced to pay subsidies directly in order to stave off social disintegration.

The Chinese authorities are certainly aware of these issues. But their choice of options is limited. Fixing one sector will be at the expense of the other.

The best way to preserve the coastal boom would be to implement immediate and drastic banking reform while unilaterally opening all sectors to full international competition. While this would undoubtedly lead to a recession, the large-scale presence of foreign companies would both cushion the blow and provide capital, markets and expertise to exploit China's low labour costs and trigger a quick revival. But it would also put several hundreds of millions of employees on the street.

Conversely, the best way to fix the SOE problem would be for China to pull out of the WTO and place heavy taxes on all imports and exports. This would provide additional funding to subsidise the state sector. It would, however, destroy the import/export sector and drive foreign capital from the country.

Beijing faces a difficult choice. In the unlikely event that the SOEs are sacrificed, the country could well disintegrate. If Beijing retreats from its WTO commitments, foreign banks - the most boisterous cheerleaders for investment in China - will become its sharpest critics and foreigners, who underwrote the Chinese miracle, will depart in droves.

China's history reflects these problems. Will we see a repeat of colonial domination of the coastal areas, dividing the country into different political regions, or will we see something of a repeat of the Great Leap Forward, which unified the nation but crushed China as an industrial power.

The issues will increasingly confront the Chinese over the next 12 months.

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