2.    KEY JUDGEMENTS

THE REGION

Pressure on resources in New Zealand's oceanic environment

2.1   There is increased pressure on fish stocks in the seas around New Zealand. Given the plundering of fish that has taken place in the northern hemisphere and in other parts of the Southern Ocean we expect that pressure to increase. This will affect our own EEZ, the Southern Ocean and Antarctic waters. We judge that unregulated or illegal fishing will increase in these zones. Evasion methods are likely to become more deliberate and refined. The Antarctic treaty system as a whole is sound and safeguards our interests (including our territorial claim). But the regulatory regime for Antarctic waters needs strengthening.

The Pacific Islands

2.2   Small size and limited resources do not make a strong foundation for effective governments in the Pacific islands. This is a major challenge for New Zealand.

2.3   Economic growth is unlikely to keep pace with population increases. Urbanisation, with its accompanying problems of unemployment, increasing crime rates, and pressure on services, is becoming a phenomenon of the Pacific.

2.4   National cohesion, especially in the western Pacific, is under strain. PNG, already under stress, fears that overly generous concessions to Bougainville will spark off demands for autonomy elsewhere. Inter-island feuding has broken out in Solomon Islands. There are communal sensitivities in New Caledonia and Fiji.

2.5   Security and defence forces can be easily challenged. Limited quantities of small arms in the hands of dissidents can have a disproportionate effect. New Zealand and Australian defence assistance in surveillance, engineering and training as well as security assistance, is sought and valued.

2.6   The Pacific islands are fertile ground for scam artists and con men offering "get rich quick" schemes. Sovereignty is often for sale in one form or another. It would not be difficult for unscrupulous outsiders to subvert and then exploit the sovereignty of a Pacific island country.

2.7   Regional organisations, ODA, remittances and sometimes the contribution of expatriate communities are critical in compensating for these shortcomings and problems. While Pacific island countries will look elsewhere (and do receive substantial amounts of aid from Japan, amongst others), for those south of the equator New Zealand and Australia are the natural sources of assistance.

Australia

2.8   Australia, simply by reason of its geographical location in relation to New Zealand, and the historic and cultural affinity between us, is a major positive factor in our strategic environment. Australia's proximity to Southeast Asia and to the Indian Ocean make it sensitive to shifts in the balance of power in the region which might threaten it.

2.9   Australia invests substantial resources in its relations with Asia, both bilaterally and multilaterally. Australia sees no immediate prospect of a strong antagonistic northern neighbour But weak neighbours also pose problems and could result in it being drawn in to buttress regional stability.

Asia

2.10   ASEAN's cohesion has been weakened. Indonesia needs to rebuild its economy (and attract capital back), bed in new political practices and build national unity. Instability in Indonesia quickly affects its neighbours, including now East Timor. Any threat to sea lanes would probably elicit a regional or international response.

2.11   China's ability to challenge the US position in the Pacific is limited but it seeks to enlarge its own room for manoeuvre. The US has significant economic and political interests at stake in a good relationship with China but China is the only country which might be perceived as an emerging threat by the US. Taiwan is an exceptionally difficult issue for the two countries to manage. China seeks regional support for the One China policy; Taiwan will appeal to democratic freedom of choice.

2.12   Internally, China has to reconcile one party rule with economic restructuring and social liberalisation. Specific pressure points include social dislocation as a result of economic restructuring, repression of religion/cults, autonomy movements in Tibet and Xinjiang (with the associated fear of external interference).

2.13   North Korea seems unlikely to collapse suddenly. But any change in North Korea's circumstances would attract international attention and requests for support from Seoul.

2.14   India's self-proclamation of its nuclear status has enhanced its international standing. While the immediate impact is slight, India is becoming a more important factor in the strategic calculations of the US, China, Southeast Asia and Australia.

2.15   There are no signs that Japan wishes to break out of the US alliance; none of its neighbours would welcome it doing so.

2.16   Latin American interest in Asia is producing a larger number of linkages across the Pacific.

THE WORLD

2.17   In the wider world the multilateral systems for managing international peace and security and the global economy, of crucial importance to New Zealand, are in a reasonable state. They are not by and large affected by great power gridlock, but they are under pressure from a number of directions.

The global economy

2.18   The forces underpinning globalisation, including all leading governments' awareness that there is no feasible alternative principle on which economic management could be achieved, should ensure that it remains the dominant trend. Equally there will continue to be opposition to it and moderate departures from it.

2.19   Political opposition to globalisation in developed countries would be significant only if it started to shape US policy. A move away from global economic integration in any of the major economies would be disadvantageous to New Zealand.

2.20   The World Trade Organisation (WTO) and the international financial institutions (IFIs) are under pressure to broaden their mandates to encompass social and environmental objectives and to make decisions in a more transparent manner.

2.21   Pressure from the developing countries is directed at ensuring that they can participate in the global economy on a footing of equality with developed countries or on concessional terms. There is selective opposition to multinationals in developing countries. Managing the distributional problems that result from opening up economies is a major challenge for governments.

2.22   Some regions, such as sub-Saharan Africa, are marginalised in the world economy. They will continue to have political and humanitarian problems which may require or result in international intervention.

2.23   Oil is the one commodity over which a major war has been fought in recent times. It remains strategically significant and on present trends the Gulf will still command the major proportion of the world's oil and gas reserves. The Gulf is still volatile. There is international competition for access to the fossil fuel resources in central Asia.

International peace and security

2.24   The United Nations has to operate with and amongst the major powers. There is a natural tension between US predominance, and resistance to this from the other major powers and the international community as a whole. This does not normally produce the gridlock which was characteristic of the cold war. But 'multipolarity' has been favoured by those (eg France, Russia and China) who in varying degrees wish to see the world organised in a way which gives them more influence.

2.25   There is no agreement on the use of UN enforcement mechanisms. Intervention is often controversial. In the recent past disagreements amongst the major powers have meant either that the UN could not act (Rwanda) or that the US (and NATO) acted without UN authorisation (Kosovo). Both types of outcome weaken the UN's system of collective security. Developing countries object to human rights or good governance being used as reasons to intrude on their internal affairs. Sanctions have been criticised for being either ineffective or unfair. But a UN without enforcement mechanisms would be even more limited in what it could achieve.

2.26   The effectiveness of the United Nations is also diminished by the difficulty of overhauling the political and financial structures of the organisation to bring them into line with current realities. The Security Council needs reform to make it more representative of the membership of the UN and to constrain the powers of the existing permanent members. This has proved elusive.

2.27   The nuclear non-proliferation regime has been weakened by acquiescence, after an initial bout of criticism and sanctions, in India's and Pakistan's overt nuclear status. While all other potential nuclear powers are already members of the NPT (India and Pakistan were not) this still sends an unfortunate signal to the rest of the world. The injection of a nuclear element into the volatile relationship between India and Pakistan has made the subcontinent a much more dangerous place.

2.28   Iraq has demonstrated how difficult it is to establish effective verification regimes in the face of a hostile party. This raises doubts about the capability of the new chemical weapons verification regime and the proposed biological weapons verification regime, even when they rely, as they must, on the cooperation of states.

2.29   The US is responding to demonstrations of missile capability in North Korea and missile proliferation in the Middle East by planning to establish a national missile defence. Such a system could threaten some basic elements of the (nuclear) balance of power.

Military power

2.30   The United States will remain for the foreseeable future the predominant power in the world. The US embrace of the revolution in military affairs (RMA) will make it difficult for even its closest allies to keep pace with it, let alone potential adversaries. The US will act forcefully to deal with threats from states armed with WMD and/or missiles, and will look for international support in doing so. The US has a need to cooperate with other countries, but the restraints on the exercise of American power will be more political than military.

2.31   NATO will continue to anchor the United States and Canada to Europe and vice versa. NATO will contribute to European security by its embrace of central Europe and through peacekeeping operations in the Balkans, but is unlikely to move further afield. NATO will continue to benchmark standards in military training and materiel. France with other Europeans will foster the development of a European defence identity.

2.32   Retaining an effective nuclear deterrent will be important for Russia as a counterweight to its generally weakened position.

2.33   Inter-state conflict is increasingly rare but conflict resulting from communal (linguistic, racial or religious) tensions within a state is all too common. The international community may be drawn into such conflicts because they are seen to pose a wider threat to international peace and security, because of the humanitarian consequences (especially if there is extensive media coverage), or by an invitation from one of the parties. There is no international consensus on when and how to intervene, but regardless the UN (and regional organisations) will continue to be called upon in such situations and states such as New Zealand which are committed to the UN and have reliable armed forces will be in the front line of those asked to contribute.

2.34   Peacekeeping operations could be required:

• In the Middle East, if the peace process advances

• In Africa - a new operation has just been authorised to keep the peace in central Africa.

• In the Balkans.

2.35   Other possibilities, depending on the turn of events, could be in the Indian subcontinent, or in Korea.

Transnational issues

2.36   Some communal conflicts give rise to cross-border terrorism. Counter-terrorism measures, often entailing cooperation between states, have had many successes. But terrorism continues to be a threat. Generally it will be linked to specific political objectives (Sikhs in India, Tamils in Sri Lanka), but there is also a pattern of Islamic terrorism which has more generalised anti-western goals.

2.37   There are a range of global illegal trades which because of their sheer scale threaten the world's political and economic systems - drugs, people and the money derived from these transactions are the most prominent. A combination of demand in developed countries, the collapse of control regimes in economies in transition, and the role of drug cultivation in selected source economies ensure that the trades will continue. New Zealand has not been a prime destination but this may be changing. The Pacific islands are particularly vulnerable to being exploited for these purposes. Such trades require a collective international response.

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