In late September, the Royal New Zealand navy ship Aotearoa joined a fleet of American, Japanese and Australian warships on patrol in the South China Sea. They sailed through the Taiwan Strait – the 180km geopolitical flashpoint separating Taiwan from mainland China – and conducted joint exercises. These were quickly followed by a series of Chinese exercises which appeared to rehearse a naval blockade of Taiwan.
In the same month, New Zealand’s exports to China, since 2013 our largest trading partner, continued to decline. Trade with the United States increased. It’s now our second export market, ahead of Australia, both of which are adopting an increasingly adversarial attitude towards China and its expansion into the Pacific. The tension increased under the first Trump administration and continued under Joe Biden.
The nature of US policy in the Pacific under a second Trump term is extremely uncertain. In May, Foreign Affairs Minister Winston Peters characterised the New Zealand-China relationship as “complex”. Neither Peters nor Prime Minister Christopher Luxon visited China during the first year of the coalition government, although Luxon met President Xi Jinping at the Apec summit in Peru this month, where Xi invited him to lead a trade delegation to China early next year.
In New Zealand, US-China tensions have played out mainly in the heated debate around Aukus, a trilateral strategic security pact between Australia, the UK and the US. Aukus initially focused on the long-term development and deployment of nuclear-powered submarines for Australia, dramatically increasing our closest neighbour’s naval power – with the stated aim of increasing security and defence in the Indo-Pacific region.
China has interpreted Aukus as an attempt to constrain its emergence as a Pacific power, with one of its senior officials warning, “The nuclear submarine co-operation between the US, the UK and Australia has seriously undermined regional peace and stability, intensified the arms race and undermined international non-proliferation efforts.”
Last May, China’s ambassador to New Zealand, Wang Xiaolong, in a speech to a China business summit in Auckland, directly attacked the alliance, which he described as “a nuclear-based military-nature alliance clearly and unabashedly designed to maintain US hegemony”, before warning New Zealand that “joining such an alliance in whatever form is taking sides” and that “counting on military alliances to maintain peace is a poisoned chalice”.
China has interpreted Aukus as an attempt to constrain its emergence as a Pacific power.
In September, China conducted an intercontinental ballistic missile test containing a dummy warhead. It landed in the South Pacific.
How does tiny, remote, nuclear-free New Zealand fit into all this global geopolitical and nuclear diplomacy? Aukus has two components, known as Pillars. Australia’s submarines are Pillar 1. They’re not expected to begin to arrive until the early 2030s.
Pillar 2 involves the development of advanced military and intelligence capabilities – underwater drones, artificial intelligence, cyber security, deep-space radar, hypersonic missiles – to be developed and deployed across a shorter timeline.
Our possible inclusion in Pillar 2 provokes anticipation, consternation and disbelief among foreign policy experts and observers in roughly equal measures.
Heat and light
This is not Winston Peters’ first rodeo as foreign minister. He held the portfolio from 2005-08 in the last term of Helen Clark’s Labour government, then from 2017-20 during Jacinda Ardern’s first term. Each tenure saw a strengthening of the relationships between New Zealand and its traditional allies: the US, UK and Australia. Some foreign policy observers see Peters’ long-term sympathies driving the trajectory towards a potential new military alliance.
When he took up the role late last year, Peters questioned the notion that this country followed an “independent foreign policy”, calling it a “perplexing refrain” and pointing out that every nation adopts an independent foreign policy but still forms coalitions and alliances. In that light, New Zealand would “vigorously refresh” its traditional defence relationships.
Luxon is an enthusiastic supporter of Peters’ foreign policy reset. After a speech in Sydney in August, he announced his intention for New Zealand to act as a “force multiplier” for Australia.
All of this has drawn criticism from our most ardent defender of an independent foreign policy – as it has been practised in New Zealand politics in recent decades – former prime minister Helen Clark. In her view, the coalition’s new direction is a dramatic reversal of a 40-year commitment to the international rules-based system, forged after our involvement in the Anzus Treaty defence arrangements unravelled in the 1980s, in which our only formal defence ally is Australia.
She notes Ministry of Defence officials are using language indicating we are now in “strategic alignment” with the US, that this shift may put our trade relationship with China in jeopardy, and it was never indicated during the election campaign. She wonders if the nation’s foreign policy is being directed by New Zealand First or defence officials overstepping their political mandate.
Clark is not a lone voice. Her former adversary Don Brash is also a staunch Aukus critic. Labour’s foreign affairs spokesman, David Parker, sees Aukus as an overt China-containment strategy designed to militarise the Asia-Pacific region.
Back in April, Labour hosted a discussion at Parliament addressing the new defence arrangement. Leader Chris Hipkins warned that the government was “rushing headlong” into Pillar 2 of the agreement, agreeing with Clark’s suggestions that the longstanding conventions around independence and bipartisanship were changing under the new administration. But the breakout star of the conference was former Australian foreign minister Bob Carr, who described Aukus as “fragrant, methane-wrapped bullshit” and praised New Zealand foreign policy as “less gullible about American blandishments than Australia”.
He’s been vocal in the debate across the Tasman, warning against the submarine deal – as has former Labor prime minister Paul Keating, who is vigorously attacking his own party for signing the nation up to “the worst deal in history”, which he warns will turn it into “the 51st state” of America.
It’s unusual, but not unheard of, for New Zealand politicians to publicly disagree on foreign and trade policy. It’s rare for former leaders of a major party to question defence and foreign policy, very rare to see it from a former prime minister, even more peculiar for China’s ambassador to comment on defence arrangements, and almost unthinkable for Australian politicians to jump into New Zealand debates.
Peters responded to Carr’s intervention with a thunderous denunciation. In an RNZ interview, he dismissed him as “nothing more than a Chinese puppet”, and implied that Carr was deeply compromised in his relationship with Beijing. Carr announced that the statements were defamatory, promising to take legal action. Six months later, no notification of an action has emerged.
Politicking politicians?
Senior Beehive advisers argue Aukus is of a piece with other significant initiatives in the US-New Zealand relationship, notably the ITPP (Individually Tailored Partnership Programme). In June, 2022, Ardern attended a Nato summit in Madrid; a year later, Hipkins went to the same event in Lithuania. These were steps towards our entry into an ITPP with Nato, traditionally a North Atlantic-based pact comprising Europe and North American nations but which now has formal arrangements with Pacific nations Japan, Australia and New Zealand. The Beehive advisers allege Labour is stirring up trouble in security and defence policy, mischievously breaching the informal bipartisan consensus on such matters.
They cite Labour’s furious resistance to the proposed Trans-Pacific Partnership, a trade deal negotiated under the previous National government. Labour MPs led protests against the deal, delivered impassioned speeches denouncing it – and then quickly signed the reworked Comprehensive and Progressive Agreement for Trans-Pacific Partnership upon assuming government. Labour says it supported the agreement after provisions it disagreed with were removed from the arrangement.
Peters is not amused by any of this. The work on potential membership of Aukus began under Ardern and continued under Hipkins. In March 2023, Nanaia Mahuta and Andrew Little, then foreign and defence ministers, met their Australian counterparts and indicated the country’s interest in joining Pillar 2 of Aukus, stressing our nuclear-free policy precluded us from involvement in Pillar 1 (not that the US and UK were ever likely to furnish us with a fleet of nuclear submarines).
Little told the media, “We have been offered the opportunity to talk about whether we could or wish to participate in that Pillar 2 aspect of it. I’ve indicated we would be willing to explore it.”
So from Peters’ perspective, Aukus was an ongoing, bipartisan project until the government changed. “They started this work, and, as I’ve said, not a mutter, not a murmur, not a syllable, not a sound from anybody, until we just took the work up and carried it on,” he told the Listener.
Peters notes the country finds itself in a moment of diplomatic uncertainty. There are upcoming elections in Australia and Canada, new governments in the UK and – most significantly, the US.
The other tiny detail that’s often missing in the debate about whether we should join Aukus is that we have not yet been asked to do so. Canada and Japan seem ahead of us in the queue. Peters flutters a hand dismissively: “Here we are with all this hullabaloo going on and we’re yet to be invited. I mean, this is astonishing. With all our present here-and-now problems, you’ve got this being manufactured.”
Time of fear
Helen Clark recently delivered a speech questioning the UN Security Council’s inaction on Israel’s presence in the Occupied Territories. Asked his view on this, Peters told RNZ, “Sometimes when you have left the stage, you should just remember that you have left the stage.”
But the concepts of retirement and withdrawal from public debate seem alien to Clark (and Peters, for that matter). She is a member of The Elders, a global NGO founded by Nelson Mandela. It’s made up of 12 senior global public figures – Nobel Peace Prize winners, former UN dignitaries and heads of state – briefed to use their “almost 1000 years of collective experience” to promote peace, justice, human rights, sustainability and solve the world’s most intractable problems.
For Clark, the backdrop to Aukus is the growing geopolitical tension between the US and China. “The broader context is around the US wanting to keep primacy in the Western Pacific, where China is clearly a rising power,” she told the Listener.
The whole atmosphere has shifted from opportunity, from understanding this major world power, to fear.
“And if that contest isn’t managed, we end up with a difficult situation, which we seem to be moving towards. China clearly sees the US as trying to constrain its development, while the US sees China as specialising in areas like surveillance or technology that give it certain powers. Meanwhile, China is clearly expanding its military.
“When I compare the times we live in now with when I was in office, it’s strikingly different. Back then, it was about opportunity for New Zealand – opportunities for trade, tourism, cultural exchange, sister cities, sports. The whole atmosphere has shifted from opportunity, from understanding this major world power, to fear. And now we’re aligning with others to control and contain China’s rise.”
Clark is fond of citing the Australian strategist and international relations expert Hugh White. “His recommendation is that, rather than New Zealand rushing into more Western military alliances, we should take a deep breath, look at how Asean countries navigate between major powers, and learn from them.”
Beehive officials stress the potential value of the technology gains from Aukus membership – quantum computing, deep-space technologies, etc – arguing they are important for our armed forces to maintain interoperability with our allies. Clark is sceptical.
“We’re seeing tech manufacturers here begin to drum up interest in Aukus, hoping for a boost. But a few contracts for tech companies won’t compensate for potential trade losses with China, and it raises an ethical question: should we align ourselves with a military-industrial complex? Also, we have basics to address. Our navy has a survey ship that recently hit a reef [and sank]. Are we ready for this? It feels absurd.”
Where’s the money?
Geoffrey Miller, geopolitical analyst with the Democracy Project at Victoria University of Wellington, says Aukus is only part of a broader diplomatic shift towards the US, and he’s been surprised by the intense focus on the pact. “It’s extraordinary the amount of ink that’s spilled on Aukus.”
He suggests this is due to the audacity of the plan. “A lot of foreign policy is quite bland. It’s important, but it doesn’t deliver the same impact as a fleet of nuclear submarines. It’s also the case that the US has picked Aukus as the most hawkish component of their challenge to China.”
For Miller, the relevant question regarding our involvement in Aukus is, “Where is the trade deal? Where’s the discussion about an FTA [free trade agreement] with the United States? If you’re going to go into Aukus, if you’re seriously considering that, then you need to have a plan B for your trade. Given the rhetoric around New Zealand’s relations with the US – there’s a lot of talk about solidarity and good friends and the longevity of the partnership – where is the trade agreement? And it could be done on a security basis.”
Our navy has a survey ship that recently hit a reef [and sank]. Are we ready for this? It feels absurd.”
Luxon recently dismissed the likelihood of a free trade deal with the US because there was “no domestic constituency” for such an arrangement. Miller believes New Zealand politicians are far too willing to accept a framework. “But yet, the US is open to free trade agreements done on a security basis. If you look at the Gulf States, for example Bahrain and Oman, both have free trade agreements with the US. Australia has a free trade agreement. As it stands, it seems to me that what you’re [looking at] is New Zealand signing up to Aukus Pillar 2 – and likely to get clobbered by China in response – for no real tangible benefits other than the feel of being in the club, of working with Australia and the United States.”
If Kamala Harris had won the US presidential election, Miller suspects we might have found ourselves joining Aukus very quickly. But the re-election of Donald Trump complicates everything. “I just don’t think that Christopher Luxon would want to be overly associated with the Donald Trump administration. So there might be some rethink. I don’t think Aukus is off the table but maybe it will be held back for a while.”
Diversify now
Last month, Trade Minister Todd McClay announced a free trade deal with the Gulf States: Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and UAE. McClay has visited India five times this year in pursuit of an FTA with the world’s most populous nation. Finding new trading partners is a matter of increasing urgency; China is still our biggest by a wide margin.
If our relationship with China deteriorates and Trump follows through with his promise to impose tariffs on foreign imports we’ll experience shocks with our two largest trading partners. It could be more significant than Britain’s entry into the European Common Market in the 1970s, which destabilised our economy and our politics for decades.
A few contracts for tech companies won’t compensate for potential trade losses with China.
Trump’s restoration throws everything into doubt. But if anyone can build a relationship with the erratic new regime it is Winston Peters. Earlier this year, he re-appointed career diplomat Rosemary Banks as ambassador to Washington. Banks has also expressed scepticism about an independent foreign policy, describing it as a “cloak of independence” in a “comfortable grey zone” in a world that’s rapidly becoming black and white.
Trump is hawkish on containing China – he has threatened 60% tariffs on Chinese goods – but seems less inclined to defend Taiwan in the event of an invasion. He’s indicated he expects US allies to spend significantly more on defence. It’s not clear where this leaves Aukus, or New Zealand’s security status or wider relationships.
Clark fears we need China more than it needs us. “Australia’s obviously been through a very difficult relationship with China but [China] needed that coal and steel, right? So they never stopped the iron ore exports. But it’s hard to think of anything we [sell China] that they can’t get from somewhere else.”
