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JONATHAN TEPPERMAN: Hi, everyone. I'm Jonathan Tepperman. Thanks, operator. I'm the Managing Editor of Foreign Affairs Magazine. Thank you all so much for joining this Foreign Affairs conference call when there are more important things, like the new pope, to attend to.

This is an especially exciting call today. It's not often that we get to talk to a former national leader, and it's even less common that we get to talk to a leader who happens to actually know what he's talking about.

Fortunately for us, Kevin Rudd happens to be both. As you all know, he's a former foreign and prime minister of Australia. He's also a true, bona fide expert on Asia in general and China in particular. So I'm -- I have to say I'm delighted to get to pick his extremely large brain on recent events in Asia and the picture going forward.

So I'm going to kick things off with a couple of questions, and then I'm going to open it up to all of you. We have about 45 minutes before Mr. Rudd has to disappear into parliament.

Kevin, before we get to China, I have to ask you about the subject that's preoccupying everybody at the moment, other than the pope, which is North Korea. Today tensions reached a new high when Kim Jong Un blamed the hostility on the "venomous" skirt of South Korea's new president, Park Geun-hye. You know things are bad when leaders starting insulting each other's clothing.

My question for you is, what do you really think is behind this sudden uptick in belligerence? Is this typical North Korean probing and positioning, especially given the new leader in the South? Or is there something more at work here? And how seriously should we be taking these threats from Pyongyang?

KEVIN RUDD: First thing about North Korea is, none of us ultimately know. Let's just be very clear about that.

So what follows here is analysis rather than concrete information about the internal machinations of the North Korean regime. Therefore, it has those caveats. Having been to North Korea twice, I feel less enlightened than I did before I went.

The second point is that to the extent that we can deduce any shift in the North Korean regime on policy questions since Kim Jong Un took over, there has been, from my Chinese discussions, more of a engagement with the North Koreans on the prospects of substantive domestic economic reform. Now, we know that has had many false starts, many false dawns over the last decade, in fact, throughout the reign of his father. But the Chinese are more upbeat on the prospects of a domestic economic reform program in the DPRK than I've heard them before.

Which brings me to my third point, that I think, given the dynamics of the regime and the still continuing huge political role of the KPA, the Korean People's Army, is that he, therefore, to obtain domestic political latitude to embark upon a partial economic reform program domestically, has little option but to remain consistently hard-line on questions of foreign policy and national security policy. So I think that's the domestic calculus.

As for what it actually means in terms of North Korean intentions, I think we're in danger sometimes of overanalyzing this. The truth is, they've systematically pursued a weapons program and a ballistic missile program for a long time now, and they now are accumulating, as we know, nuclear material. We know from their test of rocketry that they are more advanced than any of us would like them to be. Therefore, I think we need to assume that their strategic ambition remains on track to obtain the capability to make them impervious, ultimately, to external pressure.

As for the inter-South relations with newly elected President Park, I reserve judgment on that. I think President Park would be somewhat stunned by the virulent nature of the attacks on her, particularly given her conciliatory tone both prior to and subsequent to her election. But I do not have anything fresh to add on the management of inter-Korean tensions at this time.

TEPPERMAN: OK. Well, you alluded to China, so let me bring them into this conversation. One of, of course, the unusual aspects of the crisis so far is that China co-sponsored the U.N. resolution that was the ostensible cause for Jim Jong Un's current temper tantrum. How significant do you think China's participation is? And is it fair to detect a shift in Beijing's attitude towards North Korea?

RUDD: I think it's best to see this not as a break with China's past on North Korea but continued movement along a continuum, historical points on the continuum: at one end China backing North Korea, my country right or wrong approach; at the other end of the spectrum, China joining the mainstream of international public opinion in trying to rein the North Koreans in. I think it's fair to say over the last several years the Chinese have been moving along that continuum -- along that spectrum, I should say, but increasingly in the direction of greater acceptance of their role of global political and security responsibility.

Which brings me to my second point, which underpins the first, is that the internal dynamics of China's foreign security policy establishment, I believe, are at play here. As you know, the KPA's historical relationship with the PLA is deep, and it's broad, and it's institutional, and it's personal, and it's cultural. And it goes back now for two-thirds of a century. So that is one pivot -- that's not one pivot -- that's one anchor point in the internal Chinese discussion on North Korea.

The foreign policy establishment knows that this is toxic for China's efforts to obtain a greater international reputation for acting as a responsible global stakeholder when you're dealing with the likes of the DPRK or when you're dealing with the likes of Syria, or historically, for that matter, when you're dealing with the likes of Sudan.

So I think the encouragement to be taken from this is that under Xi Jinping's relatively new leadership, that we see this moving in a positive direction. This will, of course, lead to considerable angst in Pyongyang.

TEPPERMAN: Let me ask a related question but from an even more China-specific angle. This is -- along with the ongoing island spat with Japan, this is Xi's first real foreign policy test as a leader. And I'm simply curious to hear how you think he's doing and whether you think we're -- more generally, we're going to see more able stewardship of China's foreign policy under Xi than we saw in the last sort of two years or so leading up to the transition, when China managed very quickly to squander almost all of the regional good will that it spent about a decade trying to build.

RUDD: Well, this is always a difficult balancing act for Xi Jinping, given different competing forces within the regime. But secondly, having met Xi Jinping myself and spent a lot of time speaking with him when I was prime minister, but also having met a number of people around him, I continue to believe we should give him the benefit of the doubt on these traditional security and foreign policy questions of trying to take his country in a somewhat more globalist direction.

I'm not starry-eyed about this, but I believe there is a genuine openness on Xi Jinping's part to at least explore the parameters not just for a new form of the U.S.-China relationship, a new road map, as I've written in the Foreign Affairs piece, but more broadly for China to assume more of a what would be perceived to be positive global role.

So now let's look at the manifestations of that. You've correctly pointed to the DPRK decision, which would have been internally controversial within the Chinese system, particularly at the point of transition, given that the National People's Congress is still meeting to formalize the final distribution of [inaudible] as we speak on the State Council, et cetera, including the foreign policy establishment, who's the new foreign minister and who will replace Dai Bingguo on the State Council.

But I think there's a second, much more significant report that's come out of Beijing in the last week or so, and that is the proposed reform of the multiple agencies currently responsible for China's policing of its interests in its -- in the South China Sea and the East China Sea. As you know, this is often referred to as the "multiple dragons" or "nine dragons" problem, the number of Chinese state agencies involved with various interests and capabilities deployed, in particular in the South China Sea at any particular time, whether it's Customs or Maritime Surveillance or Fisheries, et cetera.

There's a very good analysis of this by the International Crisis Group in a paper, I think, of about six to 12 months ago about the enormous coordination problems this presents within the middle of the Chinese regime. Bringing this under a single administrative unit, I think called Chinese maritime police or something to that effect, is, I think, a major institutional step forward and, I think, reflects a desire on Xi Jinping's part to have greater overall control of the direction of Chinese policy in these two particular zones of contention, South China Sea and East China Sea.

TEPPERMAN: Well, one more question from me, and then I'm going to open things up for -- to the floor. Since you mentioned the Foreign Affairs article, I want to ask you about that. I'm referring to Mr. Rudd's piece in the March-April issue, "Beyond the Pivot: A New Road Map for U.S.-China Relations." In the piece, you call for a new framework for cooperation between Beijing and Washington, and you talk about making the relationship deeper and more institutionalized. Briefly explain to us what you have in mind.

RUDD: Two sets of ideas, really. The first is, shall I say, conceptual, and that is to take the opportunity uniquely presented by Xi Jinping's election and President Obama's re-election to take a new conceptual approach, which doesn't assume that conflict is the final destination point. That, I think, presents a new set of opportunities of itself.

Secondly, the Chinese system is incapable of innovating a new conceptual architecture itself, for the simple reason that that's not the way in which it's historically worked. There's no traditional equivalent in China of the planning staff of the United States State Department coming up with either a Marshall Plan or a doctrine of containment or whatever, as the U.S. system has done from time to time in producing an over-arching strategic approach for either the reconstruction of Europe or containment of the Soviet Union. The Chinese system does not have that.

But it is a system which responds to, shall I say, a conceptual ordering which is able to be put to them, in this case by the United States, and responded to by them and become an organizing principle that's accepted by them for how, in fact, the multiple arms of the Chinese state and party apparatus and military apparatus actually engage America in the region.

And the third point is this. And the third point is the meat and potatoes. First, not just accepting the conceptual and historical opportunity presented by these two individuals now, and two, recognizing that China won't innovate a conceptual framework themselves, other than to call for what Xi Jinping has called for the last 12 months, for a new form of great power relations – [in Chinese].

But the third is my argument that the United States should fill that conceptual gap by recommending what in fact this new road map should be. Essentially, if you read the Foreign Affairs article, it's got four or five core elements. It simply says that you need machinery to make this work through regular summitry. Secondly, you need a person within both systems to be the point man, what I've described as a new Henry Kissinger on both sides of the equation, because if you don't have a point man capable of interpreting the new strategic road map and dealing with day-to-day issue management, it won't happen, and it will remain a paper exercise.

But then on the meat and potatoes of it, it is essentially a question of -- on the current problems facing the global rules-based order, China and the United States working on one or other of the current big challenges facing the order together in order to demonstrate to one another and the rest of the international community that they can cooperate to make the order work.

Now, idealistically, I'd point to possibilities, whether it's on finding a breakthrough on global trade negotiations, whether it's finding a breakthrough on questions of nuclear nonproliferation, particularly in the light of the question you just asked about North Korea.

And fourthly, there is the key question in terms of the regional security order. The regional security order in East Asia is essentially that which has existed since 1945 with an overwhelming U.S. strategic dominance, but China now pushing back vigorously against that in various arms of security and foreign policy.

The problem we have, both in the South China Sea and the East China Sea, is that we do not have currently rules for the road about how to at minima manage issues so they don't escalate into local-level conflict, let alone for those to become lightning rods for great-power conflict. But what I outlined in the Foreign Affairs article is essentially how we use the East Asian Summit, which currently represents the 18 states of East Asia, including the United States now, around a common table to work out at minima confidence and security-building measures, handling incidents at sea, incidents in the air, ultimately over time peaceful means of dispute resolution as well as joint exercises, particularly in relation to counter-disaster management.

The final proposal I put is that at a purely bilateral level, U.S.-China, having dealt with, shall I say, the global dimensions of new strategic cooperation, the regional dimensions of strategic cooperation, the bilateral level, is that the military-to-military dialogue between China and the United States needs to be elevated and systematized at the level of the Joint Chiefs and for it to become a rolling, working level of engagement between the two militaries. I would also suggest, optimistically, that that may become the vessel through which – [inaudible] -- discussions could begin to occur on the vexed question of cybersecurity.

So in summary, that's the approach from the conceptual down to the practical.

TEPPERMAN: That's great. Thank you. And I hope to be able to return to this theme if we have time. But in the name of fairness, let me open up the floor to questions from our callers. Operator?

OPERATOR: At this time we will open the floor for questions. [Gives queuing instructions.]

Our first question comes from Steve Collinson with AFP.

STEVE COLLINSON: Thanks. Mr. Rudd, I wonder if, as the president begins his second term, you could assess the success or otherwise of the famous sort of diplomatic pivot towards Asia. You deal with some of it in the Foreign Affairs article regarding China, but could you sort of take a wider picture and discuss how successful it's been and what should the administration do in the second term to kind of lock in those successes?

RUDD: Very much.

I think the pivot very much represents what I would describe as the realist, just strategic foundations upon which a new period of cooperation can be built between China and the United States and more broadly with regional partners. The Chinese at the end of the day are strategic policy realists. They believe in the balance of power. As I've said in many occasions before, you'll find more volumes of von Clausewitz sold in Beijing these days than any other capital in the world. If you're teaching a Chinese military academy, you'd read more von Clausewitz, more Morgenthau, more E.H. Carr than you would in any other, probably, parallel institution in the world. That's their overwhelming frame of reference. And of course, it's anchored in their own traditional views of security as well, which is very hard-nosed, very pragmatic and very state power-based. Therefore, to ignore that reality and the way in which China approaches the question of strategic stability is to do so at one's collective peril.

The danger that we began to encounter as the years of the Bush administration wore on was that because the United States was strategically preoccupied with first the Afghanistan War and then the Iraq War, that our friends in China both identified a real and certainly a perceived emerging strategic vacuum across wider East Asia. And this was palpable in Chinese foreign security policy behavior. There was also, of course, an economic dimension to this which emerged as well off the back of the Asian financial crisis at the end of the '90s, reinforced by the global financial crisis beginning in 2007-08.

So at a political and security level, it was important to the United States to be seen by the various countries of East Asia to re-engage, and this required it to be done at multiple different levels. I think the first level was diplomatic. And having worked on this a fair bit myself as prime minister to get the United States invited to become a full member of the East Asian Summit and for the United States then to be encouraged to accept that invitation in 2010, it was critical in terms of the United States formally engaging in the regional multilateral political and security institutions. The East Asia Summit, unlike all the other regional institutions, has an open mandate to deal with political security and economic questions. Therefore its potential is yet to be realized, but it's an institution with that capability. And if America was not around that table, let me tell you, it's a very lopsided table.

Then secondly, at the military level, there has been work which the United States has done coming out of its own force posture review and defense [budget] review, which produced what was called the pivot or the rebalance, depending on the term of art that you choose to use in Washington at any given day of the week. But this was critical given that China was also perceiving that given U.S. budgetary pressures, that over time, the United States would be a thinner and thinner strategic presence in East Asia. This was also the emerging collective strategic perception on the part of not just U.S. allies but other strategic partners and other countries across East Asia.

Therefore U.S. policy, the pivot or the rebalance, both in its articulation and its specific formula about the maintenance of U.S. strategic effort in the Pacific and 60 percent of U.S. naval forces being dedicated to the Pacific, was a critical strategic communication not just to Beijing but to the rest of the region simply saying, the United States is here to stay for the long term.

Thirdly, the other arm of, I think, the rebalance has been much underdiscussed, and that's the economic re-engagement articulated by U.S. administration energy for the Trans-Pacific Partnership on trade. This is the third arm to what I've described as U.S. strategic re-engagement. The TPP negotiations, particularly with the Americans pushing the door wide open and all of us encouraging the Japanese to walk in that door, particularly under new Japanese Prime Minister Abe, is part of, frankly, expanding the global -- the footprint of free trade across East Asia. And if you bring the world's third-largest economy in Japan, that is a significant factor itself, but tactically leaving the door also open for China itself.

So all that is what I describe as constituting or reconstituting the strategic, diplomatic and economic fundamentals, realist fundamentals, of U.S. determination to remain a dominant player in Asia through the mid-century. So in terms of building on those strategic foundations, the article that I have penned for Foreign Affairs magazine outlines specifically the sorts of, shall I say, internationalist, almost liberal internationalist but cooperation-based agenda which can now be constructed on those realist foundations, hence the proposal for a new summitry, hence the proposals for new forms of global cooperation between the U.S. and China, hence the proposals for creating a common security order, rules-based, in wider East Asia and hence the proposals for beginning to negotiate a better arrangement between China and the United States on contentious questions such as cybersecurity.

So on balance, I think across Asia, this rebalance by the United States, across those three dimensions, has been seen as positive. Whenever I'm challenged on this by my Chinese friends, I ask one rhetorical question in response, which is apart from North Korea, name me one country in Asia which has not welcomed the U.S. rebalance. And it usually induces a response of silence.

So there are my points on that question.

OPERATOR: Thank you.

TEPPERMAN: Thank you. Next question, please.

OPERATOR: [Gives queuing instructions.] Our next question comes from Stanley Roth with Boeing.

STANLEY ROTH: Good to listen to you again, Mr. Prime Minister.

RUDD: [Inaudible] -- how are you?

ROTH: Fine, thanks. Wanted to get your thoughts about the China-Japan dispute in the East China Sea. That strikes me as probably the most dangerous flash point in the Asia-Pacific region. I would put it ahead of North Korea. My own assumption -- and please tell me if you disagree -- is that the issue is not differences between Chinese military and Chinese political leadership for command of control, that it's really more a question of Chinese policy, really wanting to stick it to Japan on this, making it inherently dangerous, and the risk of escalation being real. How do you see the situation?

RUDD: I broadly share your concern, Stanley, in this sense. I mean, it's impossible to aggregate finally the level of strategic concern about -- let's call it the four big ones, which is North Korea, Taiwan at any given time, the South China Sea and the East China Sea. As you know, they mutate over time. Had we discussed -- this discussion a couple of months ago, North Korea may have been [inaudible] -- and Taiwan, as you know, has totally gone off the boil, at least for the interim. But leave the relativity to those security challenges to one side, and let's focus for a moment, as you've suggested, on the East China Sea.

What ultimately drives this is a conflicting set of interests between rampant nationalisms on the one hand and, on the other hand, a pragmatic recognition by governments both in Beijing and Tokyo that conflict, for both of them, would be absolutely disastrous and would retard economic growth and stability in the wider region and would further [retard China's] -- primacy of China's own economic development objectives.

Now, if they're the two competing poles in this debate, both in Tokyo and Beijing, rational foreign policy actors would conclude that rational self-interest and rational economic self-interest would ultimately [prevail]. As you know, history cautions us against reaching those conclusions. And I think if you've seen the drift in the numbers, both in terms of Sino-Japanese trade numbers and Sino-Japanese investment numbers over the last six to nine months, the impact in real numbers is palpable and measurable in terms of the state of the China-Japan relationship.

I think my friends in Beijing, when I have spoken with them, including the military, I think it's fair to say, are working very actively behind the scenes to find face-saving mechanisms by which this can be managed to the point of stability for the period ahead and then put into some longer-term process with the Japanese. However, when I was last in Beijing, which was prior to the -- (inaudible) -- lock-on incident, it was very much a question within the Chinese minds about how one would do that without actually losing face on the national mistakes in the public discourse both about Japan and with Japan.

On balance, Stanley, I am still deeply concerned. I wrote a piece in a rival journal called Foreign Policy a month or two ago explicitly about the question of South China Sea/East China Sea, and I outlined in that two or three practical steps forward, if Beijing and Tokyo were interested, in how to manage the situation down from the current levels of high tension into a more normal state. But I'll leave my comments there.

ROTH: Thank you. I'll read the Foreign Policy piece. I had read Foreign Affairs.

OPERATOR: Thank you. Our next question comes from Jason Scott with Bloomberg News.

JASON SCOTT: Mr. Rudd, from an Australian perspective, do you think we have got the balance in diplomatic relations between the U.S. and China right? Can we keep going this middle road, this balance between supporting the pivot to our region by our largest military ally, in the U.S., and the need to not antagonize our biggest trading partner, in China?

RUDD: I do believe we've got the balance as right as we can. And this is a rolling diplomatic challenge, not just for countries like Australia, but all countries in Asia. Sometimes in Australia people seem to assume this is a Robinson Crusoe initiative; that is, as a U.S. ally with significant economic interests in China, that we uniquely shoulder this burden of maintaining these dual sets of interests.

Frankly, most countries in Asia face the same challenge. China is either the number one or number two economic partner of all the countries in East Asia, and if my data serves me correct, I think it’s now acquired that status with India as well, in South Asia. And as you know, other countries across East Asia are formal allies of the United States, some five of them, including Australia and New Zealand, New Zealand in its own particular way, and others have various forms of strategic partnership or dialogue with the United States.

So I think my first point would be all countries in the region have faced a common dual challenge with the rise of China. The second point I'd make is that that's why the region generally has welcomed the rebalance to Asia by the United States. And I'd go back to the rhetorical question I've often put in Beijing, which is name for me the one country in Asia outside North Korea which has come out and opposed the rebalance. I can't name one.

So for Australians, you know, we're a pretty bright bunch of people down here. I can tell by your accent you're obviously from [this] part of the world. We can walk and chew gum on this [question]. And therefore, my experience of having dealt with the Chinese now for 30 years in one capacity or another, going back to the very beginning of Deng Xiaoping's reform, is that it's very important to deal with our Chinese friends in an open and candid question on where we agree, where we disagree, rather than continuing to falsely mark areas of disagreement. We can do that through a sophisticated diplomacy, which I think so far we've been able to execute.

If the alternative is simply, every time Beijing becomes unhappy with an aspect of Australian or other regional foreign policy, to say we've committed some cardinal error, I think that's an entirely false premise upon which any nation state would build a long-term and durable foreign policy strategy with the world's emerging great power.

TEPPERMAN: Great. Next question, please.

OPERATOR: [Gives queuing instructions.] We are currently holding for questions.

TEPPERMAN: Well, let me jump in with another one, then. I'm curious -- and forgive me if this sounds a bit simplistic, but whether you're as optimistic as you sometimes sound about the prospects for improved U.S.-China relations over the next few years, at least if both sides are smart enough to take your advice.

RUDD: Well, in this country we don't claim to have any monopoly on wisdom on those questions. Well, we're sometimes just a bit nearer to the action and perhaps just a little more objective about what's going on, to from time to time put forward a practical proposal, but there's no claim to any monopoly on wisdom. There are many fine people both in Beijing and Washington who analyze these questions with greater rigor than I do and are much closer to the political reality of both capitals than I am.

But my overall point, and hence why I wrote the piece for Foreign Affairs and why I've made speeches on similar themes around the world -- most in the last three months both in Washington and in the National Defense University in Beijing -- is that at a conceptual level and at a potential political level, the sort of new road map for China-U.S. relations that I outline in the article is perfectly achievable. There is no fundamental political impediment to doing it. There's no fundamental strategic impediment to doing it. There's no fundamental conceptual impediment to doing it. In fact, if you looked at the spectrum of Chinese and American domestic politics over the last, frankly, decade and a half, I can see no greater potential alignment of the planets than I do at present. And this will only hold insofar as we are true to the conclusion of Obama's second term, where he doesn't have to seek a re-elect [sic], and where he can chance his foreign policy arm a little more widely than perhaps he was able to do in his first term.

So I suppose that where I'd go, Jonathan, is this: it really does, in my view, depend on the United States taking the lead. The Chinese system, even under their new leader, Xi Jinping, in their own system, does not have at this stage the capacity to say, here is our new, bold strategic concept for managing this relationship in the future. All they've managed to agree on so far is a phrase – [in Chinese] -- a new form of great power relations. But if you were to ask any Chinese leader what does that mean, it's very furry around the edges. But there is a general appreciation that they need a framework, which is not one which is ultimately assuming that this relationship will inevitably land in either conflict or capitulation by one or the other.

Therefore, I go back to the need for a U.S. initiative. The United States has a formidable foreign policy establishment, many creative minds and the great history of its own planning staffs to actually conceptualize this, institutionalize this, put it to the Chinese as a set of proposals. And if I was President Obama, I would probably either go to Beijing with this proposal, as an early priority, or invite Xi Jinping to Washington in his new capacity as president and put it to him there. Our Chinese friends are therefore required to respond.

So I think the initiative, for the reasons I've outlined, lies with Washington, and it depends on the political priorities on this question which I felt was in the White House -- I hope to be in Washington soon to take my own temperature -- what things are likely to be like, now that we have a new secretary of state, a new secretary of defense, new director of the CIA and of course some personnel changes in the White House itself.

TEPPERMAN: Thank you. Do we have any more questions?

OPERATOR: Yes, sir. Our next question comes from Genie Nguyen with Voice.

GENIE NGUYEN: This is Genie Nguyen, and thank you, Mr. Rudd. My questions have to do with Australia. Where do you see Australia, as very strong and stabilizing factors in the Southeast Asia Sea for the future, to resolve the current conflicts in the South China Sea and also to be partner with Vietnam in helping -- if we're talking about joint ventures and developing of good areas with energy or even coal in relationship to both China and the U.S.? Do you have any suggestions?

RUDD: Well --

TEPPERMAN: And if you want, you can touch on Australia's regional role more generally.

RUDD: Well, I think it's very important, on the question of the Australians' role in what I call the Asian hemisphere, not to overstate or understate influence we can bring to bear with the agency of what I describe as creative middle power diplomacy. I think the first thing is to just understand our credentials that we bring to the table and as they're perceived across Asia as well. Australia is the fourth-largest economy in Asia after China, Japan and India – [inaudible] -- $1.5 trillion economy down here, and therefore is a reasonably sized market in itself. It's the twelfth largest in the world or – [inaudible].

Secondly, in terms of our foreign policy, we have probably one of the most active diplomacies in Asia of all [the area] states. If you were to ask, what were the active diplomacies in Asia, you will find Australian diplomats in most Asian capitals and in other great power capitals, like Washington seized of and engaged in most of the big regional issues that we're facing at present. So it's a fairly sophisticated diplomatic network that we've got.

Thirdly, our position's somewhat unique. If you want to describe it in these terms, we are the West in the East. And therefore, on the question of the values and interests of a Western country in the Eastern Hemisphere, we have a unique perspective to bring to bear. But because we've never had a colonial experience in relation to the rest of Asia -- we never colonized anybody; we didn't either have, as it were, the burden of either European or, dare I say it in the case of at least Teddy Roosevelt's period as president of the United States, American colonialism, even though that was short-lived. So therefore we have a reasonable sort of status with our friends in the region. And the final thing I'd add is that because of the changing ethnicity of Australia and large Asian migration to our country, this is a country which is increasingly comfortable with its role in Asia, which is our own region. And I think Asia is increasingly comfortable with us.

Now, on specific policy, could I just make these general comments? As I said before, we make no apology for being a long-standing ally of the United States -- in fact, one of America's oldest continuing allies. And we make no apology for the absolute strength and comprehensive nature of both our political and economic relationship with the Chinese. I think that provides us with an opportunity to help build the institutions and the architecture of strategic and economic cooperation in Asia like we've done in the past. APEC, remember, was largely an Australian diplomatic initiative. Despite all its failings, the ARF, the ASEAN Regional Forum, was an Australian diplomatic initiative. The expansion of the East Asian Summit was in part an Australian diplomatic initiative to include the United States. So we've been very active at building these institutions of multilateral shall I say cooperations in both the economic, political and security spheres, and we'll continue to do that.

On the particularities of the South China Sea, I would just say this. Like all previous governments in this country, we take no position whatsoever on the conflicting territorial claims of the six claimant states. We have a different -- we simply remain neutral on that. But we are adamant about our support for all mechanisms which point to the diplomatic resolution of these tensions, to avoid conflict, because I think sometimes regional governments forget what our region was like during the period of the Vietnam War, they forget what it was like during the period of the Korean War, they forget what it was like during the period of the second world war, and that if don't have strategic stability, you don't have strategic security, then frankly the economic miracle that the Asian hemisphere has constituted over the last 30 years would simply not have occurred, and it's very easy to destroy the foundations of the continuation of that miracle into the future if security underpinnings threatened.

So we see our role as I wouldn't say central in all of that, because that overstates our size and significance, but we see our role as significant in all of that.

TEPPERMAN: Well, Mr. Rudd, do you have time to answer one more question, or do we have to let you go to work?

RUDD: That's OK. Well, the Australian Parliament, whether that's going to work or not, that's a separate and open question for the Australian public, but I do have to physically attend the building.

But no, I'm happy to take another question.

TEPPERMAN: OK. Let's take one more quick one, please.

OPERATOR: Our next question comes from KT McFarland with Fox News.

KT MCFARLAND: Mr. Prime Minister, if you could flash forward 10 years, and if the United States becomes, you know, the Saudi Arabia of the world in another 10 or 15 years and we become a major energy exporter, oil or natural gas, how does that affect the U.S.-Chinese relationship assuming that China at that point has become an even more powerful military and economic country?

RUDD: That's I'd say a fascinating question. And so far, in our discussion, we've not touched upon the energy dimensions of China's future regional role or, for that matter, its domestic priorities or its impact on great power relations, so thank you for the question.

If you're sitting in the Chinese Politburo at the moment and on its Standing Committee and you're looking at the top five priorities facing China for the next decade, the one you touched on, which is China's own energy security, would certainly loom within those top five. It's certainly been a major driving force in China's economic and political diplomacy and strategic policy for a long time, underpins China's current foreign investment strategy, including efforts both in Canada and Australia to invest significantly in long-term sources, reliable sources of energy and raw materials -- and not just in Canada and Australia but also Latin America and Africa of course as well.

Now, you legitimately point to the shale gas or new gas revolution unfolding in the United States. Having recently been in the Middle East, as you would know, this is the subject of massive analysis, not in the kingdom of Saudi Arabia but across the Gulf states as well, as rewriting future U.S. strategic interests in the Middle East.

But in terms of China, I think it's important to bear in mind the Chinese themselves have a massive shale gas exploration program under way and are looking at how this could, in fact, revolutionize their own future energy self-sufficiency as well. And so if the United States becomes a massive energy exporter, I think what is good about that is it will drive down global energy prices and also be more environmentally friendly than the current oil-based global economy. And -- but in terms of China, just bear in mind that the Chinese are seeking themselves to obtain long-term energy self-sufficiency, and there is a massive program under way with that country as well.

TEPPERMAN: Well, I promised everyone brilliance, and you didn't fail to deliver. Mr. Rudd, thank you so much for being so generous with your time, and let me thank everyone who called in to join this Foreign Affairs media call.

RUDD: Thanks, Jonathan, and also to thanks Foreign Affairs magazine for extending to me the invitation to write in the journal. I really appreciated that. And I'll look forward to seeing some of you when I get to the United States, I think in the first week or so of April.

TEPPERMAN: Thanks again.

RUDD: [inaudible] -- bye, then.