2008 U.S.-AUSTRALIA POL-MIL TALKS: PART III

S E C R E T SECTION 01 OF 03 CANBERRA 001027

SIPDIS

STATE FOR PM, NEA, SCA AND EAP
PACOM ALSO FOR POLAD

E.O. 12958: DECL: 10/14/2018
TAGS: PREL MARR MOPS AS
SUBJECT: 2008 U.S.-AUSTRALIA POL-MIL TALKS: PART III
(SOUTHEAST ASIA, TRILATERAL STRATEGIC DIALOGUE, PACIFIC
ISLANDS, DEFENCE WHITE PAPER, ENHANCED DEFENSE COOPERATION,
DEFENSE TRADE COOPERATION TREATY)

REF: A. CANBERRA 1025 (PART I)

B. CANBERRA 1026 (PART II)

Classified By: Acting Political Counselor John W. Crowley. Reasons: 1.4
(b)(d)


1. (SBU) This is Part III of a three-part cable reporting on
the annual U.S.-Australia Political-Military Talks held in
Canberra, Australia on October 9, 2008. This section covers
Southeast Asia, Trilateral Strategic Dialogue, Pacific
Islands, Defence White Paper, Enhanced Defense Cooperation,
and the U.S.-Australia Defense Trade Cooperation Treaty.
Part I (ref A) covers Iraq, Afghanistan and Pakistan, as well
as providing a summary and list of participants. Part II
(ref B) covers Persian Gulf security (Iran),Nonproliferation
and Disarmament, Regional Architecture, China and India.

SOUTHEAST ASIA
--------------

2. (C/REL AUS) In his assessment of Southeast Asia, Peter
Woolcott, First Assistant Secretary for South-East Asia, said
the economic situation overall was satisfactory although
Australia was watching the fallout from the global financial
crisis carefully. The political situation in many countries
in the region was "messy," however, citing significant
problems in the Philippines, Thailand, Malaysia, Vietnam and
Burma.


3. (C/REL AUS) The situation in Indonesia -- Australia's most
important regional partner -- was "as good as it gets,"
Woolcott said. Yudhoyono, up for re-election, would be
judged on how well he delivered on the economy and
eliminating corruption. There was an anti-incumbency mood,
but no one was strong enough to beat him, although Megawati
was close. If the economy suffered badly, there could be an
upset. Yudhoyono, whom Australia wanted to see re-elected,
had provided first class cooperation on counterterrorism.
Other areas of cooperation included people-smuggling and
administration of Australia's AUSD 2.5 billion (USD 1.6
billion) aid program. PM Rudd had agreed to co-chair with
President Yudhoyono this year's Bali Democracy Forum,
Yudhoyono's initiative to promote democracy in the region.


4. (C/REL AUS) Woolcott described China's diplomatic efforts
in Southeast Asia as "impressive," observing that, while most
countries wanted a U.S. presence as a hedge, they were
comfortable with China's approach. Japan's presence, by
contrast, hardly registered, in part because it declined to
invest political resources, such as visits by senior
officials. Fletcher interjected the Chinese were "running
Qofficials. Fletcher interjected the Chinese were "running
rings around Japan" in Southeast Asia. Ritchie noted Japan
was hampered by its WWII historical legacy, but also seemed
unable to follow-through on its initiatives; it was a major
economic investor in the region but could not translate its
investment into influence. Merchant agreed, observing that
Japan lacked the capacity to deliver, despite having some
forward-leaning senior officials.


5. (C/REL AUS) LTC Desmond Walton, Asian and Pacific Security
Affairs, Office of the Secretary of Defense, briefed on the
Pacific Command's military engagement in Southeast Asia,
particularly with Vietnam, Malaysia, Indonesia and the
Philippines, as well as with Burma in the aftermath of

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Cyclone Nargis.

TRILATERAL STRATEGIC DIALOGUE
--------------

6. (C/REL AUS) Ritchie expressed satisfaction with the strong
political commitment by all three partners to the Trilateral
Strategic Dialogue (TSD). Despite achieving a good dialogue
with Japan at the ministerial and senior officials' level,
however, Australia shared the frustration of the United
States over Japan's limited practical cooperation and
concrete actions. As Australia deepened its military
engagement with China, it would need to reassure Japan, he
added. Pacific Division Richard Rowe commented the TSD
Pacific Working Group had been particularly useful in helping
coordinate aid to the Pacific Island states.

PACIFIC ISLANDS
--------------

7. (C/REL AUS) David Ritchie emphasized that while some
Pacific Islands are doing better than others, as a whole the
region is suffering from poor economic conditions. He
briefed the group on Australia's Pacific Partnership scheme,
through which Australia will help Pacific Island Countries
achieve their Millennium Development Goals and, if they do,
reward them, as well as Australia's new pilot program on
labor mobility. Richard Rowe expressed appreciation for the
United States' support for the PIF process on Fiji. The
Forum Ministerial Contact Group will travel to Fiji in late
November. The Group will report to a special meeting of the
PIF Ministers and may recommend suspending Fiji from the
Forum, an idea which was informally discussed on the margins
of the Niue PIF. Rowe also expressed appreciation for the
APCSS conference in Tonga and encouraged DOD to have APCSS do
more such events in the future. Walton indicated OSD would
pass the feedback to APCSS, urging it to continue work on
Pacific Island countries as much as possible.

BILATERAL DEFENSE COOPERATION

DEFENCE WHITE PAPER
--------------

8. (S/REL AUS) Deputy Secretary Merchant provided background
and status of the Defence White Paper commissioned by Prime
Minister Rudd to assess Australia's force structure
requirements for the next two decades. The decision to
update the White Paper had been driven, not just by the
change of government, but importantly by the emergence of
militant Islamism, the rise of China and the new threat of
cyber warfare. In developing options, the paper's authors
were guided by the need to plan for the Australian Defence
Qwere guided by the need to plan for the Australian Defence
Force's (ADF) engagement in a conventional conflict in the
region, including the defense of Australia's border; the need
to develop higher-end warfighting capability, including
maintaining regional air superiority; and maintaining the
capability to work with defense partners outside Australia's
neighborhood, such as in coalition operations or a
China-Taiwan conflict.


9. (S/REL AUS) Merchant clarified the Defence White Paper
would posit a central construct, with a series of add-on
options, based on the GOA's commitment to maintain annual
three percent real growth in the defense budget to 2018.
Major issues concerned the shape and size of the future air

CANBERRA 00001027 003 OF 003


capability; the shape and size of submarine capability to
2025; the size of the surface fleet, including the decision
on acquiring a fourth air warfare destroyer (AWD);
development of a mechanized capability for land forces; and
development of capabilities to respond to cyber warfare. All
options needed to include both defensive and offensive
capabilities. The GOA had concluded it would buy the Joint
Strike Fighter (JSF); it was now just a question of the
number of squadrons. Likewise, the GOA planned to acquire
additional Collins class or new design,
conventionally-powered submarines. Issues related to
duration, size, numbers (between six and 12) and crew.
Missile defense (MD) was among the suite of options
considered in the
context of the AWD. Merchant said the Defence White Paper
with fleshed out options would be ready to present to the
Government in December. Australia's vision was to be the
strongest military power south of China and east of India.

ENHANCED DEFENSE COOPERATION
--------------

10. (S/REL AUS) OSD Australia Director David Michaels briefed
on the agreement reached between President Bush and Prime
Minister Howard in September 2007, and endorsed at the
February 2008 U.S.-Australia Ministerial (AUSMIN)
consultations regarding Enhanced Defense Cooperation (EDC),
including strengthening the Joint Combined Training
Capability; prepositioning equipment for humanitarian
assistance and disaster relief (HA/DR) operations in the
region; and intensifying intelligence, surveillance and
reconnaissance (ISR) access and cooperation. An update on
EDC progress would be provided at the 2009 AUSMIN. Merchant
commented that ISR was of particular significance to
Australia, which needed a long-range, high-altitude unarmed
system.

CONTINUING OBSTACLES TO CLASSIFIED INFORMATION-SHARING
-------------- --------------

11. (S/REL AUS) Assistant Secretary Peter West noted that,
despite much progress in sharing classified information since
President Bush's intelligence-sharing directive, problems
remained. While sharing of TS material worked well, there
were obstacles to sharing Secret operational-level
intelligence, which affected Australian operations in Iraq
and Afghanistan. A/S Kimmitt expressed concern that the
problems had not yet been fixed, and undertook to raise the
issue in Washington.
Qissue in Washington.

DEFENSE TRADE COOPERATION TREATY
--------------

12. (C/REL AUS) A/S Kimmitt explained that Congress had
adjourned without approving the Defense Trade Cooperation
Treaty (DTCT). He expressed optimism that the next session
of Congress under a new Administration would act favorably on
the measure. Observing that the DTCT had been initiated to
fix delays in the PM Bureau's processing system, he described
measures taken within the Bureau to drastically shorten
processing times, which would mitigate, to a large degree,
the shortcomings which necessitated the Treaty.


13. (U) Assistant Secretary Kimmitt has cleared this message.

MCCALLUM