25 JULY

AUSMIN 2018

Foreign Minister Julie Bishop and Defence Minister Marise Payne met with their US counterparts Secretary of State Mike Pompeo and Secretary of Defense James Mattis over the past two days for the annual Australia-US Ministerial Consultations (AUSMIN) at Stanford University’s Hoover Institution in California. It came against the backdrop of continued scrutiny of President Trump's performance alongside Russian President Vladimir Putin at the Helsinki Summit last week, and questions about the future role of the United States in Asia.

A joint statement released at the conclusion of the talks emphasised both the secretaries and ministers' commitment to engagement in the Indo-Pacific with regards to both defence and economic cooperation. It noted a determination to "oppose actions that seek to undermine the international rules-based order", and also acknowledged the downing of Malaysian Airlines Flight MH17, expressing full confidence in the findings of the Joint Investigation Team concerning Russia’s role.

NEWS WRAP

Calls to refocus on the Indo-Pacific 

• "Never in AUSMIN's 33-year history have Australian decision-makers been less confident about the US president's willingness to carry out the wishes of America's national security bureaucracy" – that's the assessment from two of the Centre's foreign policy team in yesterday's Australian Financial Review feature on AUSMIN consultations. But Ashley Townshend and Brendan Thomas-Noone believe prioritising Asian engagement over Middle Eastern operations should still have been urged during the bilateral meeting, no matter how politically difficult. READ MORE HERE.
   

• Shadow Minister for Foreign Affairs Penny Wong used a speech to the United States Studies Centre last week to call for Australia to work with its neighbours to find ways to convince the United States that engagement with the Indo-Pacific at all levels is worthwhile. The Guardian Australia reported on the senator's address, which focused on the role of the United States in Asia. READ MORE HERE.
   

• Where do we go from here? Senior fellow John Lee writes in The Australian today that if changing the president's mind is next to impossible, it's best to focus on the other institutions and individuals that make up the United States and its system of decision-making, and continue to engage those entities. AUSMIN is part of that process, Lee says. As is shaping the views of Trump’s executive appointees, American legislators, existing and former officials, the thousands of people who make up the think tank and policy establishment, and American media. READ MORE HERE.
   

• President Trump's declaration last week that he didn't mean what he said in Helsinki shows that he is listening to his advisors to some extent, but it highlights the perplexing disconnect between US foreign policy and the president's rhetoric, according to foreign policy lecturer Gorana Grgic. In an interview with the ABC's The World Today program, she says that while most people will take the about-face with a pinch of salt, it's unlikely to affect President Trump's high ratings among his voters, or to play into the midterm elections, which are traditionally dominated by domestic issues. LISTEN HERE.
   

• Does the lack of consequences following Helsinki mean Trump is invincible?Republicans and Democrats both seemed to suggest the president had gone too far this time, in backing Russian President Vladimir Putin over US intelligence. But his voter base seems unshakeable. Associate Professor in America politics Brendon O'Connor weighed in over at The Signal podcast. LISTEN HERE.
   

• Australians report higher levels of anxiety than Americans on issues like climate change, and virtually identical levels of anxiety about the affordability of healthcare despite Australia’s stronger social safety net, according to new polling from the Centre and YouGov. Director of the USSC's Innovation and Entrepreneurship Program, Claire McFarland, said the findings were surprising given the common perception that healthcare costs in the United States are out of control and more stressful for many Americans. READ MORE HERE

If suddenly Australia unilaterally conducted FONOPs against China, it would be the first we have done anywhere in the world. That would be an extraordinary step for a country like Australia to take when we have never conducted one anywhere.

Foreign Minister Julie Bishop responds to calls from US congressman Joe Courtney for Australia to conduct its own freedom-of-navigation operation against China in the South China Sea.
(The Australian newspaper)
24 July 2018

ANALYSIS

Puerto Rico: a sorry state

Julia Gleason
USSC internship program

On September 20, 2017, Puerto Rico was hit by Hurricane Maria, a Category-4 storm likely killing thousands and costing an estimated US$90 billion in damages to an already financially-struggling island. A study from the New England Journal of Medicine projected that the storm caused 4,645 deaths — one third of which were a result of slow medical care responses — while the US government reported a death toll of only 64.

While the storm wiped out the island’s power grid, the US federal government’s response to the crisis has been by most accounts even worse, as thousands of people continue to live without electricity ten months later. The lack of urgency by the government in the island’s recovery is indicative of Puerto Rico’s second-class status as a US territory, making it clear that it would be better off as a state.

Indeed, the hurricane seems to have exacerbated the systemic challenges Puerto Rico has faced for some time now. The Puerto Rico Electric Authority (PREPA), the island’s inefficiently functioning and indebted public utility, has failed to restore power amidst an ongoing battle for its authority between Governor Ricardo Roselló and the Puerto Rico Oversight Management and Economic and Stability Act (PROMESA).

PROMESA, a special legislative act passed by Congress in June 2016, has resulted in the untenable position of restricted Puerto Rican sovereignty and insufficient US federal oversight. A seven-member civilian oversight board with members essentially chosen by Congress, PROMESA was intended to guide the island through its $123 billion debt restructuring. However, PROMESA has become an extra bureaucratic obstacle for Puerto Rico's rebuilding efforts. PROMESA legislation not only hindered the Puerto Rican government from selling the necessary assets to privatise PREPA, it also proved unable to fix the mismanaged public utility when a federal judge rejected the oversight board's request to replace PREPA’s insolvent leadership.

The tension PROMESA created has heightened the frustrations felt by island residents along with President Trump’s underwhelming response to the crisis. The US government deployed far less emergency personnel, supplies, and FEMA-approved emergency assistance to Puerto Rico than it did Houston following Hurricane Harvey, and despite the heightened severity of Hurricane Maria, the president criticised the San Juan mayor for pleading for federal help.

Given the administration seems indifferent to the island’s plights, statehood would give Puerto Rico the sovereign power necessary to address its challenges most effectively. While Puerto Ricans are split on the issue, Maria has now left the island with few viable alternatives. Statehood would enable the island to capitalise on benefits that US states are privy to, including voting power and the full benefits of Medicare and social security.

Congress only further hampered Puerto Rico’s post-hurricane recovery economy with the 2017 tax overhaul. Passed three months after the hurricane, the tax law treats Puerto Rico like a foreign nation by imposing a 12.5 per cent tax on the income earned by mainland companies on intellectual property, thereby eliminating its prior advantage to investors that saw major businesses, including large pharmaceutical companies, locate to Puerto Rico.

In many ways, statehood is in the US government’s interest: If granted statehood, Puerto Rico could add $7.2-11.6 billion in federal taxes while becoming a haven for businesses and tourism and – in the era of America First – appeal to Trump’s goal of reducing federal deficits.

DIARY

The week ahead

• Wednesday, 25 July: President Trump is scheduled to meet with European Commission President Jean-Claude Juncker at the White House.
   

• Friday, 27 July: 21st Century Fox stockholders vote on Walt Disney merger agreement.
   

• Saturday, 28 July: Super Saturday by-elections in the Australian states of Queensland, South Australia, Tasmania and Western Aus
   

• Tuesday, 31 July: President Trump will hold a ‘Make America Great Again’ campaign rally in Florida.

EVENT

Truth decay: Exploring the diminishing role of facts and analysis

VIDEO

Sarah Huckabee Sanders says Trump may remove ex-intel chiefs' security clearance

THE WEEK IN TWEETS

#Iran

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