Really Small States in Really Big Conflicts

Written By: - Date published: 8:01 am, May 9th, 2023 - 16 comments
Categories: australian politics, chris hipkins, Deep stuff, Free Trade, Globalisation, International, Russia, trade, uk politics, uncategorized, us politics, war - Tags:

In case we just missed it, New Zealand really has picked a side.

Prime Minister Hipkins will shortly head to the NATO summit in Lithuania together with Australia, Japan and South Korean leaders. Also Vladimir Zelinskyy is intending to go as well.

We didn’t need the Russian invasion of Ukraine to tell us that great power competition is back, since China and the United States  and Russia had been going at it well before even COVID temporarily messed up the multilateral trade system upon which we had built our little country.

But it’s made it worse, and so we’re picking a side, and that side is NATO.

As relations between China and the United States grow more antagonistic, the rest of the world watches with unease. Australia has made a recent arrest of one of their own citizens for selling defence secrets to a foreign secret service while operating in China.

Two weeks ago the PLA completed major military exercises around Taiwan designed to show that it could completely cut this island off.

Beijing has alleged that Washington is working to cut it off from international markets. A violent showdown over Taiwan looks likely.

Where does a small country like New Zealand that is completely reliant on multilateral trade rules and networks position itself when great power rivalry is intensifying and the multilateral system is less and less reliable?

The quick answer is that New Zealand has no choice but to do both at once. We had good reason to be optimistic that the signing of the Comprehensive and Progressive Trans Pacific Trade Partnership would strengthen trade diplomacy.

We also had good reason to be optimistic at the result of Ministerial Conference 12 of the World Trade Organisation in Geneva in June last year. That meeting pretty much shocked everyone by revealing the Geneva Package. This was a series of negotiated agreements on global emergencies including food insecurity, the covid-10 pandemic, on e-commerce, and on fisheries subsidies.

I would not be surprised if the current government appoints Jacinda Ardern to be its rep to the WTO, or to the UN, or similar. Her skill at international relations is an important and rare asset that needs to be used at least as well as that of Helen Clark.

It is also worth noting that the world now has major treaties on climate change and a world trade system in carbon. Its hybrid governance structure is revolutionary: it combines top-down elements in monitoring and verification, with bottom-up commitments—namely the Nationally Determined Contributions—which were approved domestically by each signatory state on a voluntary basis. Argue about how effective they are all you like; they are massive multilateral achievements.

Exceedingly important for New Zealand and our realm countries is another hard won recent multilateral agreement, the High Seas Treaty.

This is to say, that the world really isn’t falling apart, our part within a multilateral order is still strong, and New Zealand can for the foreseeable future rely on that to continue.

New Zealand will never have the strength, the capacity or the need to worry about some upcoming defence posture about China. It is in New Zealand’s interests that, simply, it stay sufficiently friendly with Australia and the traditional alliances within Five Eyes and AUKUS. But it is even more in New Zealand’s interests that it keep trading with China, Australia, India, Indonesia, the United States, Canada, Japan and Europe all at once.

In reality there is little evidence of deglobalisation occurring. World trade flows (excluding international tourism) have been robust through the pandemic – and Foreign Direct investment flows are also recovering. It’s possible that world merchandise trade as a share of GDP has peaked, but that’s not the same as deglobalisation.

If anyone has visited Auckland International Airport or Queenstown Airport recently you can feel the international trade in services through tourism really accelerating as all those thousands bump around you with their suitcases. Tourism is what will help soften New Zealand’s recession more than anything else.

For the most part the rise of China, India and Indonesia compared to the United States as our near trading neighbours is consistently in our interests. And yup, there’s plenty of Chinese holidaymakers in those airports.

New Zealand is in the right place at the right time.

Yes, we should expect US global trade hegemony to continue to gradually weaken. No, that’s not a problem for us.

There is still a global order sustained by a multilateral system, and New Zealand remains one of its primary beneficiaries. Fact is, everyone needs it large and small.

A core part of multilateralism is to stop conceiving of the world in military terms, even as the Ukraine-Russia war drags on. The core relevant part of multilateralism is trade and trade institutions. The United States in particular stalled reform of the IMF until late 2015. It was only in late 2015 that the US Congress approved a transfer of 6% of the voting share from developed countries to emerging ones. This has enabled China to become the country with the third-highest voting share, behind the USA and Japan.

Arguably because they were kept waiting, China decided to create the Asian Infrastructure Investment Bank and the New Development Bank, as well as a framework to provide liquidity support in response to potential short term balance-of-payment pressures: the Contingent Reserve Arrangement.

The way I see it there is little to fear in a competition of east-west development banking facilities and institutions, particularly for small states like ourselves.

So Prime Minister Hipkins is doing precisely the right and predictable thing going to the big NATO track meet: he is continuing the time honoured New Zealand position of being friends with our own bilaterial mates with big sticks, but sustaining this tiny economy to particularly good friends with big wallets who want to buy our stuff.

That is how you remain a small successful state within a really big conflict.

16 comments on “Really Small States in Really Big Conflicts ”

  • Comments are now closed

  1. Ad 1
    9 May 2023 at 8:51 am

    Didn't we already put this one up?

  2. tsmithfield 2
    9 May 2023 at 10:09 am

    I think it is right that we are aligned with other democratic nations. Not oppressive dictatorships.

    Our exposure to China is a major concern. Last time I looked they were about 2.5 x greater than our next trading partner (Australia) in terms of exports, and over 30% of total exports. So, we obviously need to diversify as quickly as possible, otherwise, we will be very vulnerable to both sanctions from China if they don't like our political stance, or our allies if they want solidarity in sanctioning China.

    In terms of China attempting to take Taiwan by force, I have my doubts. The least bloody strategy would be for China to blockade Taiwan into submission. But, the problem for China is that China itself is very vulnerable to blockades. And China is highly dependent on imports.

    An interesting video here on China's vulnerability around the Malacca Strait. But there are also choke points between the Phillipines (where the US has bases) and Taiwan for instance. And, also around Japan.

    So, this is a problem that China would need to solve before it could undertake aggresive action for real.

  3. Ed 3
    9 May 2023 at 10:44 am

    The clue is in the name.

    North Atlantic Treaty Organisation.

    Not South Pacific.

    We are reverting to being a puppet of Anglo/American imperialism.

    A mistake.

    A big mistake.

  4. Stuart Munro 4
    9 May 2023 at 11:16 am

    We had good reason to be optimistic that the signing of the Comprehensive and Progressive Trans Pacific Trade Partnership would strengthen trade diplomacy.

    Nonsense – it ruined the hard work that had gone into building a partnership with nations of comparable size that would not abuse their market power and trade as equals. ASEAN was our direction for growth, the TPPA was the path for immature politicians that needed a big parent to tell them what to do. The Gnats came up with a deal involving a massive net loss, which Labour rejigged to almost neutrality – only for Trump to can it. Lesson learned? America cannot play trade straight – they twist and turn like a twisty turny thing.

    Ultimately NZ must side with the liberal democracies. Putin doesn't fly here, and Xi only if he keeps his mischief within his borders. Putin's little adventure has reunited Europe, with even the traditionally neutral Swiss coming out against him. None of our normal allies and trading partners are pro-Putin – so even if our diplomatic advice comes from soulless neo-liberal clowns that cannot tell a totalitarian despot from a liberal democrat, there would be no percentage in selling out our moral position in the reflexively wrong-headed way neo-liberals invariably prefer.

    • Ed 4.1
      9 May 2023 at 11:28 am

      Putin's little adventure has reunited Europe

      Not according to this article from the New Statesman, which states Europe has been spilt into East and West.

      https://www.newstatesman.com/world/europe/ukraine/2022/06/europe-divided-in-ukraine-war

      • Stuart Munro 4.1.1
        9 May 2023 at 11:35 am

        Yeah nah – it's just journalists trying to fill column inches.

        Sure there is quibbling, and funder fatigue – but with the exception of a handful of troublemakers like Orban, Europe is firmly opposed to Putin.

        Should Ukraine's offensive conspicuously fail, some of Europe may vacillate, but those facing borders with neofascist Russia, like Poland, will not fall away, or be destabilized by one of Putin's spoiling operations any time soon.

      • UncookedSelachimorpha 4.1.2
        9 May 2023 at 3:03 pm

        That article is 11 months old. Despite the predictions, both sides of the supposed split continue to supply substantial support to Ukraine today.

        • Jono letts 4.1.2.1
          12 May 2023 at 9:14 pm

          Interesting take on a complicated and largely, actually FULLY..NOTHING TO DO WITH US..situation.. so…why are we picking sides would be a good question…and somewhat staggeringly…why is neutrality regarded as some kind of dirty word in the mass media. neutrality is only flawed if its a case of a state based on world domination….this is a conflict that has nothing to do with that..hence neutral = legit position.

          The reality is US and NATO cant help themselves getting involved.

          Lets look at history shall we (and apply western logic in brackets)

          A) George Bush invaded Afg OCT 7 01 =disgrace(Sept 11th is TOTAL IRRELEVANCE)

          B) The TALIBAN got zero assitance(we must give billions to them to repel invader)

          C) Bush invades IRAQ for OIL and "were all sweet with that "(saddam getting 100 billion in weapons to punish the invaders, kill americans and teach them a lesson)

          D) Bush puts Ukraine and Georgia on NATO to do list, Russia states its extreme displeasure and appeals for calm, neutrality, talking,diplomacy for over a decade(Cuba joining Russia on weapons = ww3 standoff)

          E) 2014 completely undemocratic COU destroys democratically elected prez..(but thats ok because its a country with ties to russia)

          ….Maybe a bit of research prior to feb24 2022 would help people understand why

          ukraine is not 100% innocent either….

          Neutrality is the best position, like India has..because it does not excalate the conflict. Meanwhile..the western mass media appears to be brilliant putin mindreaders.

          The point is…The USA and Nato actively got involved when Ukraine not part of NATO…A "defensive alliance" giving weapons….go figure.

          The talks in April 2022 brokered by turkey and isreal were looking promising..then along come Johnson.

          I stand for peace….putting guns down where you stand and talking..

          • UncookedSelachimorpha 4.1.2.1.1
            14 May 2023 at 1:18 pm

            I stand for peace….putting guns down where you stand and talking..

            This is Putin's most fervent hope at present – to be allowed to keep his conquests while he prepares to grab more later.

            You stand for rewarding aggression and war, the illegal seizure of land by force, wholesale war crimes, mass murder of civilians, mass rape, systemic torture, subjugation and imperialism. Because that is what the unjust “peace” you seek is all about.

            • Jono letts 4.1.2.1.1.1
              16 May 2023 at 10:18 pm

              Oh..you mean like Bush saying "mission accomplished" on May 1 2003..where he can then steal trillions in oil.

              Your not addressing the question….Neutrality is the default. .what justification for intervention? By your own logic..china russia and Iran give sanctuary to saddam and billions in weapons..mass deaths of US personnel april 03 leading to ww3 stand off may 03

              • UncookedSelachimorpha …
                17 May 2023 at 3:08 pm

                What Bush (and others) did in Iraq was wrong, so that makes what Putin is doing in Ukraine right.

                Got it.

                • Jono letts …
                  18 May 2023 at 10:11 am

                  Giving weapons to zelensky is to kill russians is the right thing to do…..according to you.. thus giving weapons to saddam to kill Americans is right and just by your logic.

                  • UncookedSelachimorpha …
                    18 May 2023 at 1:36 pm

                    Many people opposed to the US attack on Iraq called on the USA to desist and withdraw.

                    Have you been calling for Russia to withdraw from Ukraine and cease its attacks? If not, then you aren't looking for peace – you are looking for Russia to win.

                    • Jono letts …
                      18 May 2023 at 6:27 pm

                      That is the point precisely..

                      Of course I don't Condone putin invasion..just like I didn't bushes.

                      The point is…when Bush invaded I Didn't support weapons to saddam.

                      By your logic..u support weapons to saddam to escalate =quagmire war

                      The World minus 4 countries..stood for peace Mar 20 2003.

  5. Jono letts 5
    16 May 2023 at 10:33 pm

    Oh I get it..so punish countries impersonating US and nato behaviour?

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