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S E C R E T SECTION 01 OF 03 CANBERRA 001027 
 
SIPDIS 
 
STATE FOR PM, NEA, SCA AND EAP 
PACOM ALSO FOR POLAD 
 
E.O. 12958: DECL: 10/14/2018 
TAGS: PREL MARR MOPS AS
SUBJECT: 2008 U.S.-AUSTRALIA POL-MIL TALKS: PART III 
(SOUTHEAST ASIA, TRILATERAL STRATEGIC DIALOGUE, PACIFIC 
ISLANDS, DEFENCE WHITE PAPER, ENHANCED DEFENSE COOPERATION, 
DEFENSE TRADE COOPERATION TREATY) 
 
REF: A. CANBERRA 1025 (PART I) 
     ¶B. CANBERRA 1026 (PART II) 
 
Classified By: Acting Political Counselor John W. Crowley. Reasons: 1.4 
(b)(d) 
 
¶1. (SBU) This is Part III of a three-part cable reporting on 
the annual U.S.-Australia Political-Military Talks held in 
Canberra, Australia on October 9, 2008.  This section covers 
Southeast Asia, Trilateral Strategic Dialogue, Pacific 
Islands, Defence White Paper, Enhanced Defense Cooperation, 
and the U.S.-Australia Defense Trade Cooperation Treaty. 
Part I (ref A) covers Iraq, Afghanistan and Pakistan, as well 
as providing a summary and list of participants.  Part II 
(ref B) covers Persian Gulf security (Iran), Nonproliferation 
and Disarmament, Regional Architecture, China and India. 
 
SOUTHEAST ASIA 
-------------- 
¶2. (C/REL AUS) In his assessment of Southeast Asia, Peter 
Woolcott, First Assistant Secretary for South-East Asia, said 
the economic situation overall was satisfactory although 
Australia was watching the fallout from the global financial 
crisis carefully.  The political situation in many countries 
in the region was "messy," however, citing significant 
problems in the Philippines, Thailand, Malaysia, Vietnam and 
Burma. 
 
¶3. (C/REL AUS) The situation in Indonesia -- Australia's most 
important regional partner -- was "as good as it gets," 
Woolcott said.  Yudhoyono, up for re-election, would be 
judged on how well he delivered on the economy and 
eliminating corruption.  There was an anti-incumbency mood, 
but no one was strong enough to beat him, although Megawati 
was close.  If the economy suffered badly, there could be an 
upset.  Yudhoyono, whom Australia wanted to see re-elected, 
had provided first class cooperation on counterterrorism. 
Other areas of cooperation included people-smuggling and 
administration of Australia's AUSD 2.5 billion (USD 1.6 
billion) aid program.  PM Rudd had agreed to co-chair with 
President Yudhoyono this year's Bali Democracy Forum, 
Yudhoyono's initiative to promote democracy in the region. 
 
¶4. (C/REL AUS) Woolcott described China's diplomatic efforts 
in Southeast Asia as "impressive," observing that, while most 
countries wanted a U.S. presence as a hedge, they were 
comfortable with China's approach.  Japan's presence, by 
contrast, hardly registered, in part because it declined to 
invest political resources, such as visits by senior 
officials.  Fletcher interjected the Chinese were "running 
Qofficials.  Fletcher interjected the Chinese were "running 
rings around Japan" in Southeast Asia.  Ritchie noted Japan 
was hampered by its WWII historical legacy, but also seemed 
unable to follow-through on its initiatives; it was a major 
economic investor in the region but could not translate its 
investment into influence.  Merchant agreed, observing that 
Japan lacked the capacity to deliver, despite having some 
forward-leaning senior officials. 
 
¶5. (C/REL AUS) LTC Desmond Walton, Asian and Pacific Security 
Affairs, Office of the Secretary of Defense, briefed on the 
Pacific Command's military engagement in Southeast Asia, 
particularly with Vietnam, Malaysia, Indonesia and the 
Philippines, as well as with Burma in the aftermath of 
 
CANBERRA 00001027  002 OF 003 
 
 
Cyclone Nargis. 
 
TRILATERAL STRATEGIC DIALOGUE 
----------------------------- 
¶6. (C/REL AUS) Ritchie expressed satisfaction with the strong 
political commitment by all three partners to the Trilateral 
Strategic Dialogue (TSD).  Despite achieving a good dialogue 
with Japan at the ministerial and senior officials' level, 
however, Australia shared the frustration of the United 
States over Japan's limited practical cooperation and 
concrete actions.  As Australia deepened its military 
engagement with China, it would need to reassure Japan, he 
added.  Pacific Division Richard Rowe commented the TSD 
Pacific Working Group had been particularly useful in helping 
coordinate aid to the Pacific Island states. 
 
PACIFIC ISLANDS 
--------------- 
¶7. (C/REL AUS) David Ritchie emphasized that while some 
Pacific Islands are doing better than others, as a whole the 
region is suffering from poor economic conditions.  He 
briefed the group on Australia's Pacific Partnership scheme, 
through which Australia will help Pacific Island Countries 
achieve their Millennium Development Goals and, if they do, 
reward them, as well as Australia's new pilot program on 
labor mobility.  Richard Rowe expressed appreciation for the 
United States' support for the PIF process on Fiji.  The 
Forum Ministerial Contact Group will travel to Fiji in late 
November.  The Group will report to a special meeting of the 
PIF Ministers and may recommend suspending Fiji from the 
Forum, an idea which was informally discussed on the margins 
of the Niue PIF.  Rowe also expressed appreciation for the 
APCSS conference in Tonga and encouraged DOD to have APCSS do 
more such events in the future.  Walton indicated OSD would 
pass the feedback to APCSS, urging it to continue work on 
Pacific Island countries as much as possible. 
 
BILATERAL DEFENSE COOPERATION 
 
DEFENCE WHITE PAPER 
------------------- 
¶8. (S/REL AUS) Deputy Secretary Merchant provided background 
and status of the Defence White Paper commissioned by Prime 
Minister Rudd to assess Australia's force structure 
requirements for the next two decades.  The decision to 
update the White Paper had been driven, not just by the 
change of government, but importantly by the emergence of 
militant Islamism, the rise of China and the new threat of 
cyber warfare.  In developing options, the paper's authors 
were guided by the need to plan for the Australian Defence 
Qwere guided by the need to plan for the Australian Defence 
Force's (ADF) engagement in a conventional conflict in the 
region, including the defense of Australia's border; the need 
to develop higher-end warfighting capability, including 
maintaining regional air superiority; and maintaining the 
capability to work with defense partners outside Australia's 
neighborhood, such as in coalition operations or a 
China-Taiwan conflict. 
 
¶9. (S/REL AUS) Merchant clarified the Defence White Paper 
would posit a central construct, with a series of add-on 
options, based on the GOA's commitment to maintain annual 
three percent real growth in the defense budget to 2018. 
Major issues concerned the shape and size of the future air 
 
CANBERRA 00001027  003 OF 003 
 
 
capability; the shape and size of submarine capability to 
2025; the size of the surface fleet, including the decision 
on acquiring a fourth air warfare destroyer (AWD); 
development of a mechanized capability for land forces; and 
development of capabilities to respond to cyber warfare.  All 
options needed to include both defensive and offensive 
capabilities.  The GOA had concluded it would buy the Joint 
Strike Fighter (JSF); it was now just a question of the 
number of squadrons.  Likewise, the GOA planned to acquire 
additional Collins class or new design, 
conventionally-powered submarines.  Issues related to 
duration, size, numbers (between six and 12) and crew. 
Missile defense (MD) was among the suite of options 
considered in the 
 context of the AWD.  Merchant said the Defence White Paper 
with fleshed out options would be ready to present to the 
Government in December.  Australia's vision was to be the 
strongest military power south of China and east of India. 
 
ENHANCED DEFENSE COOPERATION 
---------------------------- 
¶10. (S/REL AUS) OSD Australia Director David Michaels briefed 
on the agreement reached between President Bush and Prime 
Minister Howard in September 2007, and endorsed at the 
February 2008 U.S.-Australia Ministerial (AUSMIN) 
consultations regarding Enhanced Defense Cooperation (EDC), 
including strengthening the Joint Combined Training 
Capability; prepositioning equipment for humanitarian 
assistance and disaster relief (HA/DR) operations in the 
region; and intensifying intelligence, surveillance and 
reconnaissance (ISR) access and cooperation.  An update on 
EDC progress would be provided at the 2009 AUSMIN.  Merchant 
commented that ISR was of particular significance to 
Australia, which needed a long-range, high-altitude unarmed 
system. 
 
CONTINUING OBSTACLES TO CLASSIFIED INFORMATION-SHARING 
--------------------------------------------- ----- 
¶11. (S/REL AUS) Assistant Secretary Peter West noted that, 
despite much progress in sharing classified information since 
President Bush's intelligence-sharing directive, problems 
remained.  While sharing of TS material worked well, there 
were obstacles to sharing Secret operational-level 
intelligence, which affected Australian operations in Iraq 
and Afghanistan.  A/S Kimmitt expressed concern that the 
problems had not yet been fixed, and undertook to raise the 
issue in Washington. 
Qissue in Washington. 
 
DEFENSE TRADE COOPERATION TREATY 
-------------------------------- 
¶12. (C/REL AUS) A/S Kimmitt explained that Congress had 
adjourned without approving the Defense Trade Cooperation 
Treaty (DTCT).  He expressed optimism that the next session 
of Congress under a new Administration would act favorably on 
the measure.  Observing that the DTCT had been initiated to 
fix delays in the PM Bureau's processing system, he described 
measures taken within the Bureau to drastically shorten 
processing times, which would mitigate, to a large degree, 
the shortcomings which necessitated the Treaty. 
 
¶13. (U) Assistant Secretary Kimmitt has cleared this message. 
 
MCCALLUM