AUKUS must walk and chew gum at the same time

The foundation of China's aspirations for a more subservient region is its growing hard power. The Australian nuclear-powered submarines AUKUS promises to deliver will help balance China's rapidly expanding and modernising military.

The first set of diplomatic challenges arise directly from this new capability. The new Australian submarines could prove counterproductive if they undermine the Treaty on the Non-Proliferation of Nuclear Weapons (the NPT), encourage a nuclear arms race or otherwise threaten our neighbours. To avoid this, Canberra must detail how it will remain compliant with the NPT and more broadly reassure the region. The goal with regard to China should be to strike a balance - to deter armed aggression without provoking more hostility.

But competition with China is not just military. South-east Asia is at the heart of a broader struggle for political influence in the Indo-Pacific, in which financial initiatives - and even vaccines - are as important as military hardware. South-east Asian countries are happy to be lauded by both sides but understandably uninterested in being asked to choose between them. Above all, they don't want to see US-China competition escalating into conflict.

That's partly why Washington has made clear that the purpose of its recent outreach to China - including President Biden's call with Xi Jinping - has been to "responsibly manage the competition between the United States and the PRC". Likewise, a key message delievered by Vice-President Kamala Harris and Defence Secretary Lloyd Austin during recent visits to south-east Asia was: "we don't seek conflict".

So the second diplomatic challenge is for Australia to persuade regional states that AUKUS is not - as Beijing will no doubt claim - an atavistic Anglo-Saxon pact, bent on imposing Western values on the region or pursuing a new Cold War.

The stalling in large multilateralism - of the sort that created the NPT - has led countries like the US and Australia to more "minilateralism". Smaller groupings like the Quad (US, Japan, India, Australia) are easier to manage, and usually more effective. But the inevitable downside is that relationships with those excluded - such as France and New Zealand - can be damaged. President Biden's focus on democratic values as an organising principle for US minilateralism will exclude much, and perhaps all, of south-east Asia.

The best way for AUKUS countries to offset this would be to follow up with a more inclusive diplomatic initiative in the Indo-Pacific. That initiative should demonstrate to the region that, rather than pursing values-based conflict, they seek value-neutral mechanisms for safely managing competition.

One mechanism the US developed with the Soviet Union during the Cold War was the 1972 Incidents at Sea Agreement. It created a set of specific rules aimed at avoiding maritime misunderstandings.

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But US efforts to put similar guardrails around its increasingly vexed relationship with China have been consistently rebuffed - most recently when Xi Jinping declined Joe Biden's invitation to an in-person meeting.

As the disruptive rising power, Beijing likely suspects Washington's "guardrails" are not a good-faith effort to create neutral rules of the road, but a veiled attempt to impose rules which lock in US dominance. After all, that is exactly what China is attempting to do in the South China Sea. The ostensibly neutral "Code of Conduct" Beijing is pushing for that body of water is actually thin cover for Chinese dominance. One of its provisions would commit parties to excluding "outside powers".

The United States and its allies should initiate a multilateral Indo-Pacific Code of Conduct. It would be designed to improve maritime safety and reduce the risk of accidental conflict in the region. It would resemble the Incidents at Sea Agreement in content, but unlike the Cold War pact it would be multilateral - in recognition of the Indo-Pacific's more multipolar character. An Indo-Pacific Code of Conduct could gazump China's code for the South China Sea. It would test China's claim that it seeks peaceful win-win co-operation. The more states that signed up, the more pressure there would be for China to join.

AUKUS provides a strong structure for boosting its members' collective efforts to integrate their capabilities and balance Chinese power. But to achieve that broader strategic objective, the countries that comprise it will need to form larger groupings with different objectives. They'll need to walk and chew gum at the same time.