How Hard Would Dramatic Greenhouse Gas Emissions Reductions Really Be?

As the New Zealand Government consults on a greenhouse emissions reduction target for New Zealand we are often treated to a talking point along the lines that a 40% reduction at 2020 is "obviously" not feasible. This is always coupled with pointing out that 40% means a 40% reduction on 1990 emissions and that's a 60% reduction on today, and yes Labour was in power for much of the intervening period and what a debacle that was and so on and so forth.

Here's Kiwiblog's latest on the subject for example, and Matthew Hooton gave stirring rendition on Nine to Noon on National Radio during last week.

I had some sympathy for this view, and certainly if DPF or I, neither of us with any relevant qualifications, spend a few seconds perusing New Zealand's emissions profile, it does seem a pretty tall order to reduce greenhouse gas emissions by 60% over a decade.

Allow me to point to a remarkable recent Australasian efficiency achievement as a corrective to this pessimistic view.

Many of you will know that south-east Queensland has just emerged from a prolonged drought. At its lowest point the dams that store Brisbane's drinking water were at just 17% of capacity. As a result the Queensland Government initiated a series of water restrictions and water efficiency campaigns.

Prior to the drought per capita daily water consumption in south-east Queensland was pushing 300L. Three years later at end of the drought it was down around 130L.

That's right, domestic water consumption in south-east Queensland was reduced by more than 50% in just three years! Look at the figure, from the official report here. (Click on the figure to read it clearly.)



And what is residential water consumption in south east Queensland today, roughly a year after the end of the drought? 140L per person per day. 120L if it's school holidays.

This goes to show that dramatic and permanent efficiency gains are possible if there is the public and political will to make them. You really have to ask yourself if it is that much harder to reduce our dependence on greenhouse gas emissions than it is to reduce water use? (There are some obvious possibilities but that's for another post.)

I've said it before and I'll say it again, efficiency gains are the first and cheapest way to make reductions in greenhouse gas emissions. And the sooner big business stops paying lobbyists to derail change and starts paying engineers to work out how to solve the problem, the better.

The ideas in this post are shamelessly stolen from a recent lecture by Professor Juerg Keller. The line about engineers is likewise stolen from US Secretary of Energy and Physics Nobellist Steven Chu.

The Irish Comparison Reversed

I was amused to hear Peter Townsend, the Chief Executive of the Canterbury Chamber of Commerce, on Morning Report comparing New Zealand's economic position to Ireland's. In particular, he noted that while Treasury is predicting a peak unemployment rate of around 8%, Ireland's will apparently be north of 16%.

While we are all agreed that this is good news for New Zealand, those who spent years arguing that New Zealand was falling behind Ireland on account of failing to continue a neoliberal reform agenda may wish to ask themselves why we now find ourselves in a better position.

Vaclav Havel critical of human rights horse trading

Vaclav Havel has a timely op-ed in the New York times about the failings of the UN Human Rights Council.

It's called "A Table for Tyrants" but New Zealand still comes in for some criticism:

Now, it seems, principle has given way to expediency. Governments have resumed trading votes for membership in various other United Nations bodies, putting political considerations ahead of human rights. The absence of competition suggests that states that care about human rights simply don’t care enough. Latin America, a region of flourishing democracies, has allowed Cuba to bid to renew its membership. Asian countries have unconditionally endorsed the five candidates running for their region’s five seats — among them, China and Saudi Arabia.

In past years, Western countries encouraged rights-respecting states from other regions to compete for election. This year, they have ceded the high ground by presenting a non-competitive slate for the council elections. New Zealand withdrew when the United States declared its candidacy, leaving just three countries — Belgium, Norway and the United States — running for three seats.

Reaction to Australian Defence White Paper

Early reaction to the White Paper seems to be positive, the main criticism is with regard to the lack of budget planning. Budgetary questions are covered in one and a half pages of 140 or so.

The Minister says that more details of future funding will be in the budget the week after next.

But really, you can rely on Greg Sheridan to have the most entertaining account.

THE defence white paper is an almost incoherent blancmange of oddly unharmonised flavours.

It reads like a biblical commentary in which 50 Talmudic scholars, each representing an alternative school of thought, have been allowed to write alternative sentences.

The internal contradictions in the document are so staggering it looks like sentences have been bolted on almost at random, like pieces in a Meccano set manipulated by a two-year-old.

And yet, even he seems largely to agree with the decisions

For all that, the Government has mostly come up with the right decisions: 100 Joint Strike Fighters, 12 new submarines, the continuation of the army expansion program, new, big surface ships and so on.

In defence, to some extent equipment and budget are real policy, the rest window-dressing. Australia's neighbours in the Asia-Pacific will look at the equipment commitments more than anything else. They will see the air force, the navy and the army getting bigger and more capable. That's all that really counts. The white paper will reinforce Australia's reputation as a formidable defence power.

In New Zealand Defence Minister Wayne Mapp is not anticipating a matching increase in New Zealand funding.

Dr Mapp believes New Zealand's current defence budget is about right, and is confident the two countries will continue working closely together.

Neither does he seem to believe that Chinese growth poses much danger to the regional order.

Dr Mapp says China's military capacity has increased as its economic capacity has grown, but over the past 30 years the country has focused on trade and good relationships with its neighbours.

I hope a more considered response will emerge over the next few months. Not just Australia but also Japan have now announced significant increases in military spending in response to growing Chinese military capabilities. The point of a strategic review like our White Paper process would be to give this at least some thought, and to allow a public discussion that goes some way beyond just questions of trade.

Oh and there is an interesting discussion of the Australian White paper here, with an even more intriguing discussion of the possibilities for an invasion of New Zealand here. (Hint: still not very likely.)

Australian Defence White Paper released

So the Australian Defence White paper has finally been released, on a Saturday.

It's available here.

There will be a significant build up in Australian defence spending.

The Government says it will keep its pledge to have 3 per cent real growth in defence spending until 2018. It says there will then be 2.2 per cent real growth in spending from 2018 to 2030 as well as 2.5 per cent fixed indexation to the defence budget during this period.

The Australian's account gives a summary of the conclusions in terms of future capabilities.

It seeks to defend the nation by creating a navy by 2030 with the teeth to deny even a sizeable enemy from dominating the northern air-sea approaches to Australia. This new navy will cost many tens of billions of dollars, easily the largest single investment since Federation. Yet it does so without broad agreement inside Canberra's defence establishment about the strategic rationale underpinning this build-up and with grave doubts hanging over the Government's ability to fund and manage this vast project or find enough crew to sail its new armada.

It also requires Australians to accept permanent real growth in defence spending for the next two decades regardless of economic circumstances. This amounts to a fundamental long-term shift in Australia's public spending priorities, a difficult proposition for any government to sell to voters, much less at a time of global recession.

The plan to double the submarine fleet from six to 12, acquire three powerful new air warfare destroyers, eight new well-armed and larger frigates, 24 new naval combat helicopters, a bigger fleet of more muscular patrol craft and to develop a serious anti-submarine warfare capability, represents a quantum leap in naval power for a mid-sized country such as Australia.

This, coupled with plans to purchase 100, rather than a smaller number, of the Joint Strike Fighters will create a formidable deterrent to any aggressor and will allow Australia to project power more deeply into the region than ever.

Of course I immediately searched for all references to New Zealand, here is the key paragraph.

As the ADF incorporates new systems and capabilities, maintaining the current level of interoperability between our separate defence forces will require a concerted effort on the part of both countries. With this in mind, Australia and New Zealand should look for opportunities to rebuild our historical capacity to integrate Australian and New Zealand force elements in the Anzac tradition. This operational integration would of course be without prejudice to our respective policy choices. It could be as modest as integrating our air transport logistics support to operations, or as ambitious as an Anzac task force capable of deploying seamlessly at short notice into our immediate region. To be effective, any integrated force elements would need to exercise regularly together as a unified capability.

There is also a mention of working with New Zealand on issues like Fiji and East Timor.

As foreshadowed by the Australian, there are indeed some sharp comments on the stategic consequences of China's rise, and more particularly its military buildup.

This from Rudd at the launch

"It's as plain as day that there is a significant military and naval build-up across the Asia-Pacific region - that's a reality, it's a truth, it's there.

"Either you can simply choose to ignore that fact, or to incorporate that into a realistic component of Australia's strategic assumptions about what this region will look like over the next two decades."

So for example this on China from the White Paper

China will also be the strongest Asian military power, by a considerable margin. Its military modernisation will be increasingly characterised by the development of power projection capabilities. A major power of China's stature can be expected to develop a globally significant military capability befitting its size. But the pace, scope and structure of China's military modernisation have the potential to give its neighbours cause for concern if not carefully explained, and if China does not reach out to others to build confidence regarding its military plans.

China has begun to do this in recent years, but needs to do more. If it does not, there is likely to be a question in the minds of regional states about the long-term strategic purpose of its force development plans, particularly as the modernisation appears potentially to be beyond the scope of what would be required for a conflict over Taiwan.

On the question of Taiwan there are two interesting comments. This in the White Paper

Taiwan will remain a source of potential strategic miscalculation, and all parties will need to work hard to ensure that developments in relation to Taiwan over the years ahead are peaceful ones. The Government reaffirms Australia's longstanding 'One China' policy.

Secondly, at the press conference Rudd was asked about Taiwan and replied with a strong emphasis on the importance of the US alliance. I've looked online for a transcript of these remarks with no success, but they were commented on by Gerard Henderson on Insiders this morning.

Updated: Here is the exchange in question, I can't for the life of me see it as anything other than a reiteration of the status quo.

JOURANLIST: Prime Minister if China attacks Taiwan in any way, will Australia help defend it?

PM: Thank you for that question. Australia’s policy in relation to the Taiwan Straits has been one of a bipartisan consensus going back a long, long time and will be into the future. It contains two elements. One is that we do not speculate on any future contingencies concerning what may or may not happen in the Taiwan Strait. The second part of my response to your question is that Australia takes seriously its alliance responsibilities to the United States.

The New Zealand Option

I have yet to read Hugh White's Lowy Institute paper on Australian Defence Paper.

However I have listened to his recent talk at the Institute.

As I have noted earlier, White's analysis is that during the course of the coming century the growth of Chinese economic and military power will strain the international order in the Pacific and may lead to a significant danger of conflict.

White sees three options for Australia in this environment.

1/ To recommit to the US alliance and accept that this will require greatly increased military committments from Australia.

2/ To aim for a more self-reliant defence and a more independent foreign policy stance.

3/ The New Zealand option.

Now my readers outside Australia, particularly those in New Zealand, should note that this is a laugh line.

White is arguing that the first two options, which would see Australia retain its status as something called a "middle power", will require a much greater expenditure on defence as fraction of GDP. The third alternative is, for the moment, unthinkable.

(Are there any countries other than Canada and Australia that actually aspire to the status of "middle power"?)

If this analysis of China becomes widespread in Australia surely New Zealand's "independent" defence and foreign policy would come under much greater pressure from our nearest neighbour?

Who's talking about Ireland now?

It became very tedious a few years ago to listen to continual unfavourable comparisons of New Zealand with Ireland coming from the kind of commentators on New Zealand economy and politics that read the Wall Street Journal.

Given that Ireland was an EU member, a short plane flight from continental Europe, I was never sure that the comparison should carry much weight.

Nevertheless it might pay to note that Ireland has, perhaps predictably, been a major victim of the global financial crisis, with GDP this year predicted to fall 10% below its peak.

Paul Krugman's description of the situation there may have some lessons for New Zealand.

How did Ireland get into its current bind? By being just like us, only more so. Like its near-namesake Iceland, Ireland jumped with both feet into the brave new world of unsupervised global markets. Last year the Heritage Foundation declared Ireland the third freest economy in the world, behind only Hong Kong and Singapore.

One part of the Irish economy that became especially free was the banking sector, which used its freedom to finance a monstrous housing bubble. Ireland became in effect a cool, snake-free version of coastal Florida.

Then the bubble burst. The collapse of construction sent the economy into a tailspin, while plunging home prices left many people owing more than their houses were worth. The result, as in the United States, has been a rising tide of defaults and heavy losses for the banks.

The Australian Defence White Paper and China

The Australian this weekend carried a front page article on the Australian Defence White Paper.

It appears that the Rudd Government has overridden the assessment of Australian intelligence agencies. The intelligence agencies apparently regard failed and failing states in Australia's vicinity and involvement with the UN and the US in counter-insurgency operations further afield as the main challenges of the ADF in coming years.

Others in Defence wanted to see a more aggressive effort to confront China.

Senior Defence officials argued privately that the ADF needed to be structured to enable it to play a key support role alongside US forces in any future conflict with Beijing. "They saw the rise of China as the new Cold War and decided that this needed to be the focus of future strategy," said one Defence insider.

Apparently the hawks won, and there will be a significant build-up of Australian defence capabilities to combat the growth of Chinese military power.

The standoff between the intelligence doves and defence hawks has gone all the way to Kevin Rudd personally.

But the hawks have won, and Australia will spend more than $100 billion over the next two decades to boost its naval and air war-fighting capacity.

The rise of China will shape Australia's defence planning for a generation.

The Rudd Government's defence white paper, due out later this month, will call for a more potent and costly maritime defence for Australia.

The expansion of Australia's sea and air defences will include a doubling of the submarine fleet, 100 joint strike fighters, new spy planes, as well as powerful new surface warships.

The White Paper should finally emerge before the end of the month.

Also in the Weekend Australian a foretaste of Hugh White's forthcoming Lowy Institute paper on the White Paper. He seems to very much agree with expanding the submarine and fighter jet fleets. He calls on the Government to dramatically increase defence spending, in order to be able to maintain its strategic weight in the region against competitors whose GDPs are growing rapidly.

To build a focused force to achieve Australia's long-term strategic objectives as they are now defined would need spending 2.5 per cent of GDP or more. This is not unthinkable: it is comparable with our defence spending in the 1970s and '80s.

Ministers will be tempted to say we can afford all the forces we need within current funding projections if it is spent more efficiently. That may be wishful thinking. Huge efficiencies in defence are possible but they will require really forceful leadership to achieve, and that has been lacking for a long time. And even if new brooms can turn defence on its head, the long-term trends suggest that Australia has no choice but to spend more on defence or accept a steady decline in strategic weight. A mere 20 years ago Australia's economy was the second largest in Asia after that of Japan: larger than India's or China's. How quickly the balance has shifted.

I can't resist mentioning that currently the RAN is often unable to operate more than half of its existing submarine fleet due to skill shortages, and, one understands, low morale.

A side-note to New Zealand readers: to take the temperature of the current debate in Australia on relations with China you should google the names of Defence Minister Joel Fitzgibbon and Chinese-born businesswoman Helen Liu.

You might think that this enormous focus on the future of the Chinese relationship in our nearest neighbour and closest ally might arouse just the slightest interest in the New Zealand media. Particularly given that we are about to undertake our own Defence White Paper. Particularly given that Prime Minister Key is even now in China. As the indispensible Tailor of Panama St notes so eloquently today, that is far too much to expect of our dangerously withered media organisations.

Things I've Learnt About Agricultural Greenhouse Gas Emissions

While on holiday on in Nelson I engaged in some blogging back and forth with Charles Finny at Dear John on the subject of agricultural greenhouse gas emissions and Kyoto.

Since then I have been trying to get up to speed on some of the questions we discussed so as to reach a non-holiday, informed, opinion on the issues.

One good resource for information is the UN Food and Agriculture Organisation's 2006 report Livestock's Long Shadow. Despite being a product of the dreaded UN, and one that has come in for some political criticism, this seems to me a generally informative and well referenced report. In particular Chapter 3 addresses agriculture's impact on the carbon cycle.

Firstly: we spent some time on arithmetic. Charles wanted to estimate the savings if agricultural methane emissions were discounted under the assumption that every atom of carbon in emitted methane originated from grass that had recently absorbed CO2 from the atmosphere due to photosynthesis. This resulted in a reduction in CO2 equivalent emissions equal to about 10% of agricultural methane emissions.

Whatever the merits of the premise I would argue that this shows that New Zealand policy makers should pay very close attention to the provisions related to agriculture in any Kyoto successor with a view to improvements that could also constitute significant savings to the New Zealand taxpayer. And it goes without saying that more attention could probably have been paid in the negotiation of the original treaty.

Finally on this point I'll just mention that Kyoto apparently regards the CO2 emissions from livestock respiration as being offset by the CO2 absorption of the grass they eat but charges in full for methane emissions from enteric fermentation and the decomposition of dung. This is addressed in section 3.2.2 of the report.

That said, I still don't know what is wrong with the argument that every C atom in CH4 emitted by livestock also originated in CO2 recently absorbed by the grass they ate.

Secondly: this discussion assumed farming was going on in a steady state. The report highlights the fact that land use changes, in particular cutting down forests for agriculture, result in much of the carbon emissions related to agriculture. Deforestation in New Zealand in favour of dairy farming has been a significant source of carbon emissions as we all know.

Thirdly: on a related point we also ignored the fact that farm land, like forests, can be significant carbon sink and the stored carbon can be increased by appropriate farming practices. It's estimated that one quarter of the international response to climate change could involve storing carbon on land (terrestrial carbon sequestration). Of this it seems that about a third could be carbon storage in agricultural land rather than new forests or avoided deforestation. (For information about this you should take a look at the recent Lowy Institute talk by Ralph Ashton, video here and podcast from the Lowy Institute.)

Typically the conversion of natural ecosystems to agriculture results in the loss of 20 to 50% of the stored organic carbon in the top metre of soil. However there is evidence that at least 50% of this lost carbon storage can be restored by appropriate farming practices. These include agricultural intsensification, conservation tillage and erosion reduction. This is discussed in section 3.5.1 of the FAO report. It seems that Professor Rattan Lal at the University of Ohio is at least one of the world experts on this and those of you with access to a Science subscription may be interested in his review article on soil carbon sequestrtion, global warming and food security.

The hook here is that, unlike sequestration in forests, avoided deforestation and agricultural sequestration are not included in Kyoto. So while they have a positive effect on climate change they do not contribute to a nation's responsibilities under Kyoto. A high level group the Terrestrial Carbon Group, which includes Nobel Prize winning economist Joseph Stiglitz and Australian environmental scientist Tim Flannery, have a proposal for how to fix this in any Kyoto successor. This proposal is discussed in Ashton's talk.

Surely if the New Zealand government wishes to put flesh on the bones of its statement at Poznan it should be advocating for efforts like this and in particular a fuller accounting of agricultural emissions and carbon storage?

Agriculture and Kyoto

Most scientists would argue that the Kyoto agreements have many serious deficiencies but are the only framework we have for international efforts to curb greenhouse gas emissions and minimize the risk of catastrophic, or just very damaging, climate change.

From New Zealand's point of view the most serious questions about Kyoto and its successor agreements relate to the impact of agriculture on greenhouse gas emission.

Readers of this blog, if there are still any, might like to take a look at my discussion about some aspects of this with Charles Finny over at Dear John.

Australasian Contributions to International Climate Change Negotiations

While we await Kevin Rudd's statement on the Australian Government's carbon emission targets on Monday, much attention has turned to the international negotiations on future climate change agreements.

Ross Garnaut wrote a very useful op-ed in the Australian this week. He notes that these negotiations will be much more difficult than either trade or arms control agreements, and proposes some warning signs for difficulties in such talks.

If you hear negotiators from the respective countries arguing that Australia needs high per capita entitlements because it is big and lightly populated, or Canada because it is cold, or Japan because it has few opportunities for geo-sequestration of emissions from fossil fuel combustion, or China because it is the workshop of the world, you will know that the world has lost the battle to avoid dangerous climate change.

It's a cheap shot but I can't resist pointing out that some of New Zealand's statement in Poznan sounds exactly like this

New Zealand is unique among Annex 1 countries. With nearly 50% of our total emissions coming from agriculture, no other developed country comes close to having such a large percentage of its emissions arising from food production.

(Hat-tip: Charles Finny)

Given the ACT party's clutch on climate change policty, some aspects of the New Zealand statement were reassuring. But would Rodney Hide agree with this?

As a consequence we are reviewing our suite of climate change policies. The objective here is not to step back from Kyoto. The Government fully understands and accepts its long-standing international obligations under Kyoto for the first commitment period.

Prior to the election Hide stated his preference for leaving Kyoto.

In any case, Garnaut has become convinced that the eventual target for international negotiations must be equal per capita emmissions from all nations, and that progress should be measured in terms of per capita emissions reductions rather than reductions of particular nations or groups of nations from benchmarks in 1990 for example. This seems pretty sensible to me.

I was happy to see the mention of research on agricultural emissions mitigation in New Zealand's statement, and the emphasis on forms of agreement that will be satisfactory for developing nations. These aspects are very consistent with Garnaut's thinking about ways in which developed countries can contribute initially.

My work on The Garnaut Climate Change Review (Cambridge University Press, 2008) has led me to the view that any allocation of emissions entitlements with a prospect of being accepted by most developing countries must be based on convergence towards low levels of per capita entitlements at some time in the future. There will need to be headroom for rapidly growing developing countries. Through a transition period, the commitments of lower-income developing countries would be one-sided, with compliance encouraged through incentives rather than penalties.

The agreement over emissions entitlements would need to include developed country commitments to public support for research, development and commercialisation of low-emissions technologies. The agreement could embody firm commitments by developed countries to cover additional development assistance for complying developing countries to adapt to the climate change that will inevitably be faced in the period ahead. It could be supported by a proposal for World Trade Organisation rules to constrain individual countries' measures to restrict trade with countries that are not reasonably complying with the requirements of an international mitigation effort.

At the centre of the agreement would be an understanding on the allocation across countries of a diminishing total of annual emissions entitlements. These would be allocated on the basis that emissions would converge towards equal per capita entitlements at some time in the future.

The difference between the basis of allocation of emissions entitlements proposed here, and the Kyoto approach of fixed but differentiated reductions, is large. Within principles designed to reduce global emissions through convergence over time towards equal per capita entitlements, a reduction of 10 per cent from 2000 levels by 2020 in Australia would represent a full proportionate contribution to a global effort to hold concentrations of carbon dioxide equivalents to 550 parts per million. It would represent a larger per capita reduction than was required of the US or the European Union. It would represent a larger per capita reduction for Australia than the EU's implementation of its proposed unconditional commitment to reduce emissions by 20 per cent from 1990 levels.

Select committee terms of reference

It seems that since the order paper was published earlier in the week the following clause has been added to the terms of reference for the climate change select committee

identify the central/benchmark projections which are being used as the motivation for international agreements to combat climate change; and consider the uncertainties and risks surrounding those projections

Good on you Rodney! And a great performance on Morning Report this morning, arguing as usual that there is no rational evidence for human impacts on global temperature.

Some would call this arse-backwards when many years of scientific observations and modelling have led the world's climate scientists to exactly the opposite conclusion. But as we all know the entire scientific community has been captured by an unthinking infatuation with Al Gore who invented the idea of climate change (along with the internet) while conspiring at the UN to institute a world socialist government back in the Clinton Administration.

Seriously, this clause is much better than the original one in the confidence and supply agreement. It should be possible to get reputable scientists and economists to greatly enlighten the committee about the observations and projections that form the basis of international concern on this issue. It is also true that there are uncertainties and risks in our current knowledge. Many of these are on the "down-side" as John Key would say.

The previous demand for opposing views on the science was merely an invitation for poorly credentialed cranks to waste the select committee's time.

ACT in Government: Wasting your taxpayer dollar

Lets be clear. The Select Committee review of emmissions trading is a waste of money and a broken election promise on the part of National.

National was quite emphatic before the election that the ETS would not be repealed, that emissions trading would go ahead, and certainly that "the scientific aspects of climate change" were no longer up for discussion by New Zealand politicians.

We appear to be back to square one, at least if the select committee Terms of Reference in the confidence and supply agreement are final, or if Murial Newman gets her way. Here she is in the NBR spouting the "warming stopped in '98" canard and calling for a select committee review "of the science". As if scientists were not continually engaged in reviewing the scientific aspects of climate change!

It's breathtaking that ACT want to hear "competing views on the scientific aspects of climate change from internationally respected sources" when pretty much every scientific association in the world, including our own Royal Society of New Zealand, has carried out a careful review of the science and concluded that anthropogenic global warming is real.

I challenge ACT to find an internationally respected source to disagree. (And no, Thatcher-era UK cabinet ministers don't count. I'm interested in a scientifically respected source.)

In any case everyone is in agreement on this point so write a letter to John Key already.

Trans-Tasman contrasts in response to financial crisis

The Australian government dedicated half its surplus or $10.4 billion dollars to a stimulus package. The money goes out before Christmas to those most likely to spend it; pensioners and their carers, low income families and first home buyers ($14,000 from the State when you buy a house! That's twice the Howard government level.)

This was done without any detailed Treasury modelling because both officials and politicians were of the opinion that immediate action was needed. In particular it appears that Australian and international experts are not very confident of the continued health of the Chinese economy which is the main driver of growth in resource rich Australia.

The economy is still dominating the front pages and Rudd has announced the goal of avoiding recession and developing regulations in response to the crisis that will be a model for international developments. This is consistent with his extraordinary ambition to be seen as a player on the world stage.

I suppose that it is no surprise, given the Election season, that by contrast the front page news on the New Zealand Herald website at the moment is that Lockwood Smith has been known to make a dick of himself. Who knew?

Cullen will be happy to find that fishhooks in the detail of the Government's bank guarantee were big news in Australia this morning. So Australian moves are not without percieved missteps.

Meanwhile the outcome of the NZ election is not a topic of great interest.

Short Selling in New Zealand?

A propos of yesterday's comments on short selling in New Zealand, it appears that neither the Australian newspaper nor the regulatory body ASIC are of the opinion that the practice is insignificant.

In a hurried decision yesterday, ASIC revealed covered shorts could be taken in dual-listed stocks such as BHP Billiton, Rio Tinto, ANZ Bank and Lion Nathan, as the stocks were at risk of being savagely shorted on their secondary exchanges in London and New Zealand.

This is in marked contrast to the points of view on Morning Report Monday. Not my bailiwick this issue, but it must be possible to find the truth one way or the other.

In general the ban on short selling seems to be attracting increasing criticism.

Shared Values and Common Purpose

John McCain has an opinion piece in today's Australian. McCain's real connection with Asia and the South Pacific and committment to free trade are the best reasons why bloggers like The Hive, for example, are so excited about McCain's candidacy. The argument for McCain from an Antipodean point of view is put pretty well by Andrew Shearer at the Lowy Interpreter here.

It's heartening that as well as canvassing the long history of the Australia-US alliance and issues such as terrorism McCain includes a strong statement backing US leadership on climate change and against torture. The foreign policy statements seem to me to have a considerable neo-con, rather than Republican realist, flavour. (I can't resist noting that while it's true that Australians have "suffered terrible terrorist attacks" it shouldn't escape our attention that Australia has not.)

New Zealand readers of course will skim for that all important "Z"

In Asia this means engagement must begin with our allies. Our alliance with Australia sets the standard. Our ally Japan has proved a strong and reliable partner to the US and Australia. South Korea is taking on new global responsibilities. We can reinvigorate our traditional alliances with Thailand and The Philippines and build on newly strengthened partnerships with Singapore and India. And we should recognise our shared values and common purpose with New Zealand.

Now is that the same as small-a "allies"? Having run through 'allies' and 'partners' we get 'and we should recognise'? The tone is quite grudging.

Still waiting for final whistle on US-India nuclear trade

It appears that the backdown last week at the Nuclear Suppliers Group may have been associated with some private side agreements restricting the sale of fuel enrichment and reprocessing technology to India and other countries that are not signatories of the NPT. The report in the Washington Post is here.

The Arms Control Wonk discusses it here and here.

Kessler cites “sources familiar with the discussions” making two claims:

1. “[The NSG] privately agreed last weekend that none of its members plans to sell sensitive technologies to India .. [to] persuade several skeptical member states to support a waiver authorizing nuclear trade with India…”

2. “The NSG separately is nearing consensus on a total ban on sensitive sales to countries such as India that have not signed the Non-Proliferation Treaty … [This was] another factor in persuading countries such as Ireland, New Zealand and Austria to end their effort to write such trade restrictions into the waiver for India.”

This doesn't seem to address the question of what happens if or when India tests a nuclear bomb but it definitely represents a significant win over the public version of the deal.

Those of you interested in Kim Jong-il should be reading the Arms Control Wonk also.

Did we back down on the nuclear agreement? Yes

If you are interested in this issue there are now blog posts at Kiwiblog and No Right Turn.

DPF argues that Clark backed down on this one. I think this is true but I am not sure that I blame Clark greatly. Would a National government have been more resolute on this issue? Even once we were the only country on the NSG to remain opposed to the agreement? At the cost of improved trade access to the US? No I thought not.

Idiot/Savant on the other hand argues that we did not back down because we got most of what we wanted. In this he relies on the Herald's summary of New Zealand's goals in the negotiations.

New Zealand had wanted:

* Action to be taken should India resume nuclear testing;

* For India to sign up to an International Atomic Energy Agency protocol extending its monitoring powers;

* A review of the exemption.

(The full text of the waiver is available here, and a complete analysis from the arms control point of view here.)

It's certainly true that the three points mentioned by the Herald are addressed in the waiver as I/S notes. However this list is drawn up after the fact.

In interviews prior to the NSG meeting Goff was very clear; New Zealand and other nations wanted it written into the waiver that a nuclear test by India would end the supply of uranium. Avoiding this was the goal of US and Indian diplomacy and we backed down, the waiver is not conditional on India refraining from testing.

Here is Goff in an interview by the ABC

LOPRESTI: So with the safeguard agreement would you like to see tighter controls over India such as with the nuclear tests?

GOFF: Well we'd like to see what's already built as part of the United States Hide Act, which allows the United States to undertake nuclear trade with India, which requires that the deal would cease immediately in the event that India would conduct a nuclear test. India's not currently conducting tests; it says that it's made a domestic decision not to do so. We'd like some certainty around that and should not be an impossible ask of India to say that as long as you, in fact it's not even an ask, it could be built unilaterally into the agreement that this exemption would only apply so long as India did not again test its nuclear weapons.

This is a very unfortunate development but I blame the Bush administration rather than New Zealand and the US congress may still act to require such a conditionality at least for US sales.


Particularly unfortunate is the situation whereby countries like New Zealand have had to put their concerns in national statements that do not form part of the waiver. The Arms Control Association notes:

Because of the negotiations were tough and the real differences not fully resolved, there will likely be serious differences between India and most of the NSG about the interpretation of what the guidelines allow and don't allow and what the consequences of any violation of India's nonproliferation and disarmament commitments would be. This outcome is a failure of the NSG as a whole, the U.S. delegation, and the NSG chair Germany.

Also the Arms Control Wonk

I worry this sets up a potential trainwreck:

* Indian officials believe they have what they seek: the legal commitments at the core of a strategy that will mitigate the consequences of a resumption of testing. (The fuel reserve, access to the international marketplace, etc.)

* NSG members, on the other hand, believe they have a political commitment, however weak, from India to refrain from testing and options to isolate India again in the event that it violates the pledge.

One of the two parties is wrong. I am not eager to find out which.

NSG agrees to India waiver

In a dramatic last minute agreement the NSG has agreed to the waiver for the US-India uranium deal. Details of the waiver are sketchy and the deal must now get through the US congress.

According to the Hindu, New Zealand was the last to concede in a classic divide and conquer strategy by high level US diplomats.

“It was clear to us that as long as these countries were a group, they would remain a problem,” a senior Indian official said. “But we also knew none of them wanted to be the last man standing.” So between the United States and India, a determined political effort was made late Friday night to ensure each of the four came on board. The first to agree was China, said the official, and the last New Zealand, with Ireland and Austria also dropping their objections in between. Though the last three communicated their decision to Washington, the official said the Chinese side directly informed India that it intended to back the consensus.

It seems that little has been done formally to modify the original waiver, but that a statement on September 5 from the Indian Foreign Minister reiterating their moratorium on testing has been mentioned in a 'chapeau' to the waiver. New Zealand is also one of several countries to make a national statement expressing disquiet at the deal. From the Hindu again:

Though several minor changes were made in the India waiver adopted by the Nuclear Suppliers Group on Saturday, the most important change from the point of view of those countries with non-proliferation concerns was the incorporation of a reference to the September 5 statement made by External Affairs Minister Pranab Mukherjee reiterating India’s stand on disarmament and non-proliferation.

Among the commitments the statement highlighted were India’s voluntary and unilateral moratorium on nuclear testing, its “policy of no-first-use of nuclear weapons” and several initiatives the country has taken in recent years to press for the elimination of nuclear weapons at the global level.

For a feeling of the pressure that has been exerted there is this:

Asked for his assessment of the waiver, a diplomat from a European country which initially wanted much stronger conditional language said his government had joined the consensus “very reluctantly.” “I wouldn’t say we’re happy,” he said, adding that his country and several others had been “leaned on at the highest levels.”

I take it we can assume that we have been "leaned on at the highest levels" also.

The Washington Post has run an impassioned critique of the deal here.

The Group of Six Still Making Trouble in Vienna

The first day of the NSG meeting is now over. The Hindu has talked to diplomats representing countries opposed to the US-India uranium deal and the prospects for the deal do not appear bright.

The six countries holding out for tougher conditions to be written into the draft proposal granting India an exemption from the NSG's rules are Austria, Ireland, New Zealand, Norway, the Netherlands and Switzerland. But the coalition is a shifting one and the six are getting support from other countries on some of the demands they are making. At the same time, the number of countries pushing for approval of the exemption has also grown, say diplomats.

The biggest issue appears to be the requirement that any nuclear test by India would result in a cessation of uranium sales. Interestingly this may be most strongly opposed by the big uranium supplying nations (France and Russia for example) than by India itself.

Automatic cut-off of supplies in the event of India abandoning its moratorium on nuclear testing "has been our absolute bottom line from the beginning," said the diplomat, "and there is no question of it being dropped". At the same time, he conceded that more than India, it was the "big supplier nations" like Russia and France that were opposing automaticity of termination. "We know the U.S. is committed to terminating supplies [if India tests] but we don't want to leave the decision within the NSG to each individual PG [participating government]".