Small State Syndrome: Can New Zealand balance the US and China?

Line of Defence Magazine, Autumn 2018

What alternative strategies of alignment might be considered by the New Zealand government?

In this exclusive Line of Defence interview, editor Nicholas Dynon talks with Dr Reuben Steff, lecturer in International Relations and Global Security at the University of Waikato, about the implications for New Zealand of a decline in US-China relations.

Dr Reuben Steff and doctoral candidate Francesca Dodd-Parr recently released findings from their survey of New Zealand’s strategic studies community on NZ’s relations with the US and China. Respondents were asked to assess the state of relations between NZ, the US and China, the expected future state of relations, and to provide their views on aspects of the three states’ bilateral and triangular relations.

The majority of responses predict a decline in relations between Beijing and Washington over the coming decade, with one-third of respondents believing a ‘major crisis’ is likely between the US and China (it’s worth noting that the survey was conducted prior to the 2016 US election). What, asks Dr Steff, are the implications of this for New Zealand’s foreign policy?

Is continuing to steer a middle path between Beijing and Washington feasible when New Zealand is economically dependent on one and security-dependent on the other? Or, as one respondent put it, is this approach “akin to straddling a barbed wire fence while standing on ice blocks”? What alternative strategies of alignment might be considered by the New Zealand government?

In another paper published in the Pacific Review in January, Dr Steff writes that small states throughout the Asia-Pacific are confronted by a growing dilemma over how to balance their traditional security ties with the US and rapidly growing trade with China. This gives Washington and Beijing potential leverage over small states to use within their competition with one another.

He explains that New Zealand, as a small state, has adopted a mixed set of strategies to manage its position between the US and China, closely aligning itself with Washington while remaining nonaligned on some key security issues in the Asia-Pacific region. Wellington has certainly not opted for neutrality, he observes, and its much-vaunted ‘independent’ foreign policy is open to question.

ND: In relation to the literature on small states, you stated that some authors contend that relative weakness implores small states to be cautious and defensive, while more recent analyses suggest that small states can adopt proactive multi-vector foreign policies to pursue their interests. What do you mean by ‘multi-vector foreign policies’?

RS: We can think of the overarching set of strategies small states pursue through their foreign policies as sitting somewhere on a continuum, and dependent on the norms that govern interstate relations at any one time.

At one end, small states pursue a limited foreign policy that predominantly focuses on maximising their security, usually by emphasising their economic interests, territorial sovereignty and by seeking ‘shelter’ under the umbrella of powerful states (usually through an alliance or less formal but de facto security alignment).

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In the literature, this approach has been adopted throughout long periods of history where norms of international behavior did not prevent larger states from threatening or physically coercing small states to the same degree that they do today. In a threatening world, small states have less leeway for foreign policy experimentation.

At the other end of the spectrum, small states (like New Zealand) still seek to guarantee their core national interests (trade, territorial sovereignty, alignments with friends/allies etc), but the liberal norms of international behaviour that spread after World War II (especially throughout the extended Western security alliances) provided greater security assurance for small states.

This, in combination with the acceleration of globalisation (increased economic/security interdependence and more channels for international engagement) in the 1980s enabled small states to expand the focus of their foreign policies beyond narrow pursuit of their national interests and adopt ‘multi-vector’ foreign policies.

This involves promoting common rules in international and regional institutions, efforts to protect the global commons (‘global interests’), and support for humanitarian concerns abroad that, in earlier historical eras of greater threat, would have been considered an indulgence.

ND: You’ve stated that most New Zealand commentators do not adopt “the worst-case view of some realists in the US that an intense regional conflict is inevitable. Instead, they hold that Wellington will probably not be forced to ‘pick a side’ in the near future between Beijing and Washington.” How representative do you think this is of the positions of New Zealand’s international relations/strategic studies academics?

RS: I believe most New Zealand academics share this view. It is based upon research I conducted in late 2016 into the existing scholarly literature on this issue and from a written survey of members of the New Zealand strategic studies community. That said there were a couple of dissenting responses to this view by respondents who believed New Zealand would eventually have to pick a side.

I would also add that a number of other states are in this position throughout the Asia-Pacific region and have been more outspoken on the issue. For example, Singaporean Prime Minister Lee Hsien Loong has stated, “If there are tensions between America and China, we will be asked to pick a side.”

My personal sense is that although New Zealand’s geographic distance may provide us with more flexibility than other states in the region (such as Singapore), we should not assume with absolute confidence that New Zealand will not be ‘asked’ by one or the other to pick a side during a crisis or over specific security issues in the Asia-Pacific region, especially if US-Chinese relations deteriorate in the years to come.

ND:  You’ve suggested that there are mixed opinions over whether the hypothetical scenario of an interruption to China-New Zealand two-way trade would severely impact on NZ economically. Is diversification of our trading partners the logical approach to mitigating this?

RS: Absolutely. While the global system has experienced a period of relative stability since the end of the Cold War (in many ways owing to the sheer scale of American power), we should bear in mind that periods of stability can rapidly end.

At present, there are indications that global competition – in both the military and economic spheres – is heating up in a number of regions, and between the great Asia-Pacific powers, namely China and the US. President Trump’s tough talk on China during the 2016 US election campaign is now being translated into policy, with the US designating China a ‘strategic competitor’ in its recent National Security Strategy. Practical steps by the White House against China on trade are now being taken (which is also stimulated by Trump’s need to appease his domestic political base).

Great power competition is back, and this could have implications for New Zealand’s trading relationship with China given our close security ties to the US. In this context, economic diversification makes even more sense for New Zealand.

Even at the best of times, New Zealand should be trying to diversify its trading partners in order to hedge our bets against disruption. This increases our options should any – or a number – of our key trading partners suffer a domestic economic downturn or one powerful state threatens or tries to blockade the coast of another during a severe crisis (cutting it off from sea-borne trading routes and New Zealand’s products).

It can also position us to take advantage of emerging economies in far-flung territories that could be the regional economic powerhouses of the future. Ensuring we have as near to a ‘first-mover’ advantage in promising regions (such as sub-Saharan Africa) could prove critical to whether our companies can succeed in these markets.

ND: If ideologies defined the international security and great power rivalry context of the later 20th century, culture and values so far appear to be defining the international security context of the 21st century. Beijing’s values place China essentially at odds with the West, including New Zealand. With Australia and a number of EU states more vocally articulating their values-based opposition to China in many areas, does New Zealand have less to fear from pursuing a less muted, less risk-averse, more frank rapport with China?

RS: For a start, I will push back a bit against the assertion in your first sentence. I would not say culture and values are necessarily defining the international security context in the 21st century. At times, they motivate the behaviour of states. However, culture and values interact with power (the opportunities afforded to states by their material capabilities), sometimes leading states to use their power to defend, secure and advance their values, sometimes by actually restraining them.

There is both a defensive and offensive impulse embedded in values. Thus, the degree to which Beijing’s values and rising power place it at odds with New Zealand and the broader Western world, and whether this will lead to escalating tensions and, at worst, even forms of confrontation, is hard to judge.

To answer the second part of the question, I’ll give an academic answer and say yes and no. Yes, New Zealand probably has less to fear by pursuing a franker rapport with China since we pose practically no threat to Beijing, which views New Zealand as a fair-minded partner to engage with and a test case to assess whether developing free trade ties with Western states is in its interests.

However, on the other side of things, New Zealand cannot escape the fundamentals of its position as a small state and one that has scant material capabilities with which to resist pressure from larger stares. Therefore, even if there is seemingly little risk to New Zealand of being less muted over values, New Zealand officials may judge any risk is too large to run given the potential consequences to our trading ties.

Another possibility would be for China to ‘punish’ a small state (like New Zealand) that speaks out on values by reducing or interfering with trade in order to send a message to larger trading partners that they could be next. In this scenario, New Zealand would be a victim of a much larger game.

Ultimately, If New Zealand wants to have a more ‘frank rapport’ with China, we have to recognise that values don’t just go away, and despite the clear risk-aversion of New Zealand leaders in this area, recent moves by Xi Jinping to consolidate his power at home could have implications for Chinese foreign policy and for broader Western-Chinese relations.

Perhaps New Zealand needs to have a frank rapport with itself and decide whether it wants to stand up for values in world affairs at all and to what extent, or if it is comfortable with adoption a position of agnostic transactionalism for the foreseeable future.