Stephen Smith MP
Minister for Defence

Subjects: AUKMIN, Afghanistan, security cooperation, Tunisia, Korean Peninsula

E & O E – PROOF ONLY

KEVIN RUDD: I'd like to take this opportunity publicly to welcome the British Foreign Secretary, William Hague, and of course the British Defence Secretary, Liam Fox.

It's good to have you here in Australia. And as I said in our private session just before you are genuinely welcome guests in our country.

William confessed earlier on it had been something like 20 years since a British Foreign Secretary had been to Australia. That has by any man's reckoning been somewhat long between drinks. But we've made up for it today in a very good and substantial way across a very wide-ranging agenda, and we look forward to these AUKMINs continuing into the future.

Many have said in the past that this relationship between Australia and the United Kingdom is one based purely on idle sentiment. Can I simply say, that is wrong.

This relationship is based on common values, common interests, and common sense. And it also has so much of its life-force in the ties that bind our two people's together. And that is why we're here today - to discuss and agree on common courses of action in the complex agenda we face in the international community at present.

In our discussions today we have agreed that this AUKMIN meeting will now occur on an annual basis into the future - either in Australia, or in the United Kingdom, or in third countries depending on where we happen to be at a particular time, being a people who know one another well - peoples who know one another well, we're fairly relaxed about questions of venue, the importance of the regularity of the engagement.

We've also agreed on a common work program for the future which reflects very much the content of our discussions today, covering the future of our regional architecture here in the Asia-Pacific region, the future engagements of us both in Afghanistan and in Pakistan, the common challenges we face in terms of cyber-

security and in counter-terrorism, the common challenges the international community faces in the Middle East, and our continued quest for a comprehensive peace settlement between Israel and Palestine.

And of course the particular challenges we face today in the international community in the recently concluded referendum on the future of southern Sudan.

From Australia's point of view, the United Kingdom is an important partner intrinsically. The UK is the sixth largest economy of the world. The UK is a member, permanently so, of the UN Security Council. The UK together with ourselves are members of the G20. And also we are common members of the Commonwealth which will meet here in Australia, in Perth at the year's end.

Bilaterally the economic relationship is extensive and significant for both of us, and of course our bilateral Defence engagements, our bilateral security and intelligence relationships go back a long long way and are of vital relevance to our respective national interests.

Also, given that we will be attending again as Foreign Ministers the Commonwealth meeting at the end of this year, both the Foreign Secretary and myself will look forward to particular proposals about how we continue to reform and invigorate the Commonwealth into the future - an institution which is doing much good in the world.

Finally, the Australian Government is pleased to accept two specific offers of assistance, which the British Government has provided in terms of flood recovery in Brisbane, my own home town. And I'm very pleased to have been able to invite William to visit Brisbane with me to inspect some of the flood recovery work tomorrow morning.

I'll ask William to go to the detail of those particular offers of assistance which the British Government has made to us.

I conclude by saying this has been a good and substantial discussion. We have agreed on common courses of action for the future, a common work program between us, as well as an agreement for the first time that this AUKMIN gathering will now occur on an annual basis.

I conclude by saying that our British ministerial colleagues are very welcome guests in Australia. We look forward to meeting tonight over dinner with the Prime Minister.

And we look forward very much to our continued contact with our British friends in what will be a very challenging year in the international community in 2011.

William.

SECRETARY HAGUE: Thank you very much. Well ladies and gentlemen, Liam and I are delighted to be here in Australia with a delegation of senior officials from the United Kingdom. This is, taken together, the most substantial British Government visit to Australia in many decades, and I want to begin by thanking Kevin Rudd and Stephen Smith for all their hospitality today and the long discussions that - and very productive discussions that we've had.

We are indeed much looking forward to dinner this evening with the Prime Minister where we can continue the discussions we've been having through the day. And any British visitor to Australia would want to say, first of all, how saddened we have been by the floods in Queensland.

British people on their televisions have watched this very very closely, have watched an appalling [Audio skip] very closely, and their hearts have gone out to those who have been involved. And our thoughts - and the thoughts of everyone in Britain - with those who have lost family members, with the thousands of people who have had to evacuate their homes.

Kevin has invited me to Brisbane tomorrow to see the relief operation at first hand, and I think the bravery of the men and women who have been leading that rescue effort has been exceptional.

We do want to assist in any way that we can. And we are able to do so in a small way - Australia has accepted the offer of our assistance to the Queensland task force of UK experts in flood recovery management who've helped communities recover from the effects of floods, and of experts in advanced flood forecasting methods, from our UK Flood Forecasting Centre which brings together meteorologists and hydrologists to forecast river and tidal and coastal flooding.

And I hope their expertise is going to be of assistance.

It's hard to believe that the British Foreign Secretary hasn't been to Australia for more than 17 years - and this visit should be taken as a clear signal of the determination of our coalition government in Britain not just to reach out to new allies, but to renew and deepen relations with closest friends, and that is what we've been engaged in doing today. The UK enjoys, continues to enjoy an extraordinarily close relationship with Australia, one that runs well at the level of government, but also at the level of so many individuals and businesses and families.

And we've had an excellent round of talks today. Sufficiently excellent that we have agreed to do this on an annual basis as Kevin has explained. We've enormously valued the insights of our Australian colleagues. We have agreed to [Audio skip] operation on cyber security. We've shared our analysis of Afghanistan. We've discussed international terrorism where we already cooperate closely. And we've considered ways to maximise the impact of our counter-terrorist effort.

We've talked about the dangers of weapons proliferation, including the direction in which Iran is travelling. We've talked about the changing power balances in the Asia-Pacific region. And we have indeed discussed the Middle East peace process and our joint belief that the parties involved should return to direct talks and refrain from acts that undermine confidence such as settlement building.

And on all of these issues, and many more, I've been struck by the commonality of interests between our nations. Though separated by thousands of miles we see eye to eye on all of the major issues affecting our security. And we're both fortunate to have diplomatic, defence and intelligence communities which we're prepared to use in defence of our joint, shared interests.

We look forward to the Commonwealth conference, the Heads of Government Meeting, in Perth later this year and to advocating steps to reinvigorate the Commonwealth in the future, something I've believed for a long time. So now I hope is the time that the common understanding between our nations will come ever more into its own and I'm convinced that the best days in the UK Australia relationship are still to come in the future.

KEVIN RUDD: Thanks very much William. Stephen.

STEPHEN SMITH: Thanks Kevin. Well, can I join with the Foreign Minister to warmly welcome the Foreign Secretary William Hague and the Defence Secretary Liam Fox to Australia. We're very pleased to see them here after a long absence so far as British foreign and defence secretaries are concerned, and very pleased to, together with the Foreign Minister, to host the third AUKMIN, but to host the first AUKMIN in Australia, and very pleased that we've agreed that AUKMIN meetings will now occur on an annual basis. And as a consequence, we've set out for ourselves a work program to deal with the issues of mutual interest and mutual concern.

Every Australian sees the historical, the people to people, the commercial, the investment, the trade links between Australia and the United Kingdom. But not enough of us appreciate how deeply embedded are the defence, security, strategic, and intelligence arrangements and cooperation.

Indeed, AUKMIN, sometimes referred to as a 2+2, is a meeting style and arrangement which Australia has with a small number of countries - the United States - and you'll recall we had AUSMIN in Melbourne at the end of last year - Japan and we've agreed this year to hold our first 2+2 with Indonesia.

So it is an arrangement that we have with a small number of countries which reflects the importance of the security, strategic, defence, intelligence cooperation arrangements with the United Kingdom. And the communiqué and the other documents published reflect the substantive nature of the discussions that we've had today and their productive nature.

Can I just draw upon a small number of items. We obviously had an extensive conversation about Afghanistan and the difficulties that we face in Afghanistan. And also the difficulties on the Afghanistan-Pakistan border area and indeed the challenges that Pakistan itself faces.

Since the last time we met in the United Kingdom in 2008, some new strategic and security challenges have emerged. We had very productive discussions about cyberspace and very productive discussions about space and space awareness. And on both fronts we have agreed to work much more closely together. Cyberspace is indeed an emerging, but potentially one of the most challenging, issues that we face, and we've agreed that our officials and as Ministers we'll work very closely together on that common challenge.

On the particular defence side since we last met, in Australia we've seen the 2009 White Paper and the Strategic Reform Program, the Defence Strategic Reform Program and the adoption of our Force 2030 and our budget rules. Since the Cameron Government came to office and Liam became Defence Secretary, we've seen in the United Kingdom the Strategic Defence and Security Review, not just with the United Kingdom, not just with Australia but also with the United States and other countries, that this is the era of fiscal restraint so far as defence is concerned and the need to maximise value for money, value for effort and efficiency so far as procurement and defence projects are concerned.

So given that we face comparable challenges, we've agreed on that particular front that we will not just share information and share experiences but also embed personnel - to have United Kingdom officials and Australian officials draw from the experience that we respectively have in this area. On that front, as the Foreign Minister and the Foreign Secretary travel to Brisbane tonight for tomorrow, tomorrow Liam and I will fly to Adelaide where we will have bilateral discussions on defence, science and technology issues but also on procurement and interoperability issues and we'll do a range of inspections on that front in Adelaide.

But William and Liam, we're very pleased to host you in Sydney. We're very pleased to be able to warmly welcome you for the third AUKMIN and we look forward to our agreed commitment to make AUKMIN an annual, regular occasion on the Australia-United Kingdom defence, strategic, security and intelligence front. Thank you.

KEVIN RUDD: Thank you, Minister. Liam.

LIAM FOX: Thank you very much. Can I begin by thanking you Kevin and Stephen for your hospitality in hosting us today. William said it's almost 20 years since a British foreign secretary was here. We can't actually find any record in living memory when a British defence secretary was here, so we're certainly breaking new ground. But as Stephen said…

KEVIN RUDD: 1788, mate.

LIAM FOX: Sorry?

KEVIN RUDD: 1788.

LIAM FOX: We don't wish to go quite that far back. But we intend to make this a much more regular occurrence than that sort of time lapse.

Can I begin though by saying on behalf of the British Government a heartfelt thank you to the Australian Government, the Australian armed forces and the Australian people for the contribution that you have made in Afghanistan. We hugely appreciate and understand and feel for the sacrifices that you have made. It continues a long tradition of your country being involved in communal security often in difficult and far-flung parts of the world. And you have set a wonderful example for other countries who could have done more had they followed the Australian example. And we are extremely grateful for everything that you've done in our support and in support of the international coalition.

Today we discovered that we have a shared world view. We recognise that benefits come from globalisation and trade and prosperity, but in globalisation we also get an unavoidable share in global risk. We believe that the risks and threats to our interests are now more widespread than before, they come from more places and more actors than before, and we need to confront them together.

In that we have a very shared approach. We believe that we should shape the world around us rather than wait for the world to shape us. We have a belief in our system of values which we intend to fortify and defend, and we believe in a concept of multi-layered security. We not only have our strong bilateral relations; we work together through the five powers, we work in international organisations, and we intend to be able to deal with as many of the threats that we perceive as possible through as many different levers at our disposal as possible.

We in the United Kingdom have had our defence review. We remain the world's fourth biggest defence budget. We intend to cooperate post-defence review on a wide range of issues, learning from our mutual experiences. We have been looking at space, at cyber. We fought in many battles together in the past. Now we face the war of the invisible enemy in cyberspace and we're committed to dealing with that together. Our intelligence, our coordination will continue.

In Afghanistan we shall continue to press not only for more security but a political settlement that will give security and peace in that region. In Iran we will continue as part of the international coalition to stop nuclear proliferation that can only lead to a nuclear arms race in one of the world's most dangerous areas.

We have, as everybody has said, a shared history and a long friendship, but perhaps most importantly we have very strong mutual interests that will stand us in good stead in a solid partnership for the future.

KEVIN RUDD: Thanks very much, Liam, and thank you very much, colleagues.

Now, I understand the People's Collective of Journalists has agreed on half a dozen questions. So could I ask them spontaneously to raise their hand. Ian.

QUESTION: Ian McPhedran from News Limited. I have a question for Mr Rudd and for Mr Hague.

Do you expect your countries' forces to be in Afghanistan in 10 years' time? And if not, when do you expect them to no longer be in Afghanistan?

KEVIN RUDD: Well, we of course are committed to the strategy which was recently agreed to formally at Lisbon on behalf of ISAF countries and a strategy which is also consistent with the public declared aspirations of the President of Afghanistan, Hamid Karzai.

That of course sets a destination point of a transfer of security responsibility to the Afghan security forces in or around 2014. As for any continuation of Australian presence beyond that date, I think as others in the Australian Government have indicated, we will then transition out, as we did consistent with our military deployments previously in Iraq, and then reduce to zero.

Unless the Defence Minister wishes to add to what I've just said, I'll then pass to Secretary Hague.

STEPHEN SMITH: The Foreign Minister has summarised what he and I and the Prime Minister made clear in the course of our Parliamentary debate, and subsequently we are confident that we continue to be on track for a transition to Afghan-led responsibility for security matters by 2014 in Oruzgan Province. We then expect, as the Foreign Minister has said, to transition out, but as the Prime Minister said we expect that there will be an Australian commitment so far as Afghanistan is concerned for a long period of time, and I expect that will particularly be on the long term capacity building, civilian assistance, development assistance front.

But as the Prime Minister has made clear, we believe we're on track for that transition process by the end of 2014. We do expect or anticipate or envisage that there'll be some defence responsibility after that but the details of that are something that we will have to make a judgment about at the time. But the most important thing seized by the international community and seized by President Karzai and his Government is to transition to Afghan-led responsibility for security matters. And in Oruzgan we believe we're making progress on that front.

KEVID RUDD: William

WILLIAM HAGUE: Like Australia the United Kingdom will have a long-term commitment to Afghanistan, but in terms of troop deployments the key point is the one that Kevin and Stephen have been making about the build up of the Afghan national security forces and the transition to Afghan control province by province and district by district. It is the internationally agreed objective that by 2014 the Afghan national security forces should be able to sustain their - lead and sustain their own operations of the country. And so on that basis our Prime Minister has said that by 2015 British troops will not be engaged in combat operations in Afghanistan or there in anything like the numbers that they are today. But the long term work in terms of development aid and economic cooperation, diplomatic and other support we'll be there I think for much much longer than that.

KEVIN RUDD: Liam did you wish to add anything.

LIAM FOX: Just very briefly people will say to us I think in both countries you've been in Afghanistan for 10 years isn't that long enough, when are we going to see a real breakthrough? And I would make this simple point to them; that in terms of having adequate manning, in terms of having adequate equipment we've really only been in Afghanistan for the last year since the end of the American surge.

This winter therefore becomes a very vital time for us in terms of denying the Taliban, the safe havens and the space to fighters, and 2011 and 2012 therefore become very vital years.

But since those who are our adversaries pay attention to what we see let me finish by saying, on behalf of us all, that they should never doubt our determination to leave Afghanistan as a place where terrorists will be denied the territory they once had and where they cannot launch the sort of attacks against us, our people, our allies or our interests that we've seen in the past.

KEVIN RUDD: Thanks very much. Next question.

QUESTION: Lee Preston from ABC TV, and a question to the Defence Secretary Dr Liam Fox. Staying with this subject of Afghanistan do you think that Australia should send more troops to Afghanistan? You've praised Australia's commitment, you've said what an example it has set, could Australia have sent more troops or in the future send more troops. Minister’s Office: 02 6277 7500 or 0466 745 615 Department:02 6261 1555 8

LIAM FOX: Well I think there's an issue for the whole of the coalition now, and that is as we move forwards to the period when the Afghan forces themselves are more capable of dealing with their own security internally and externally what should our appropriate response to that be? And our response as an international coalition should be that we should be providing more man power for the training mission. It's quite clear that we're gradually going to move away from the combat role that we've had into a training mission. And I think that my message would not be a criticism of Australia but should be to urge other countries to follow Australia's example and to make the commitment that Australia made, but make it in a way that enables us to leave together as a united international coalition and to make sure that we have sufficient numbers of Afghan forces trained to a sufficient level to make what we leave behind a sustainable legacy.

QUESTION: [inaudible] Firstly should the UK bolster its troop commitment?

STEPHEN SMITH: The United Kingdom makes a substantial contribution, the United Kingdom is one of the leading powers in NATO and the contribution the United Kingdom makes is one of the largest to Afghanistan. In Australia's case - and might I add in very, very difficult and dangerous terrain in Helmand province. So we have nothing but admiration for the contribution that the United Kingdom have made.

In terms of our own contribution I think it's worth reflecting on the fact that before the Riedel and the Obama Review and the subsequent surge which saw about a 40 percent increase in United States and NATO and ISAF countries in terms of a contribution, which occurred at the end of 2009. In April/May of 2009 we, of course, then made our own 40 percent increase in Oruzgan Province from 1100 to 1550 directly and precisely for a mentoring and training effort because we realised at that stage that what was required was the training effort. And since that time, since our increase to 1550 we have, at the request of NATO or ISAF or General Petraeus from time to time enhanced our training capacity, in particular niche or specialist areas, and artillery is one example that we agreed to when I last visited Afghanistan in September of last year.

If I could just follow up on one of the comments that Liam made. I said in the Parliamentary debate that we've got ourselves now into a position where we had the correct military and political strategy and the resources to match it. But when people look back on the Afghanistan effort they would come, I thought, to the conclusion that the only problem was that we had arrived at that position half a dozen years too late.

We now have a coherent military and political strategy, we now have in our view the personnel on the ground to effect that including the leadership, whether it's General Petraeus, whether it's Ambassador Sedwill, whether it's UN special representative Stefan di Mistura.

And we believe we've made progress. We want to consolidate that progress not just in Oruzgan Province but in Afghanistan generally over the winter months and proceed from there.

I finish my remarks by making the point that we've never seen Afghanistan being able to achieve our objectives in removing the prospect of Afghanistan again being a training ground for international terrorists. We've never seen that being able to be achieved by military means or force alone. It also requires a political strategy and in that respect the United Kingdom, in the past and today, is at the vanguard of arguing that we need to have reintegration, rapprochement, reconciliation. And Australia strongly supports that, as we did at the London Conference on Afghanistan in January of 2010.

KEVIN RUDD: Next question.

QUESTION: Paul Osborne from Australian Associated Press. It's a question for Mr Rudd and Mr Hague. Mr Rudd, I hope your foot's feeling a lot better.

It's a question a bout Tunisia. Was Tunisia part of your discussions today and do you think it represents a breakthrough for democracy in the Arab world or a danger for instability in the region, particularly given British interest in Tunisia? BG's one of the biggest investors in that country and, you know, I'd just like your perceptions on that.

KEVIN RUDD: Yes, on the first point, Tunisia was the subject of discussion among us today and not just because of its intrinsic significance but also its ramifications across the broader Arab world.

Secondly, in terms of how Tunisia unfolds, developments on the streets in Tunis are fluid and I think it is wise to hold off any substantive comment in terms of how events will be concluded there.

Thirdly, on the question of the democratic deficit in a number of countries in that region, I think that has been a reality for a long time and it is a reality which needs to be addressed as well.

WILLIAM HAGUE: Yes indeed, we have discussed it and I'm in regular touch with our embassy in Tunis. I think we have to be careful to - always to draw conclusions about what will now happen in other countries from the events that have happened in Tunisia.

Of course those events, as Kevin says, those are still fluid. It's important that the interim government there gets on with matters quickly and decisively; that they do so in accordance with their constitution and respecting human rights.

The elections that are now scheduled, in our view, should be free and fair elections and that should be clear to the world and so - but I think it is possible to say that the situation in Tunisia would have been helped - the situation of the people of Tunisia would have been helped - by more effective economic development and by a more open and flexible political system.

So other countries must draw their conclusions from that but it's still a developing situation and we should not rush to predict events elsewhere from what has happened in that particular country.

KEVIN RUDD: Thanks very much. Yeah?

QUESTION: Paul Maley from The Australian newspaper. My question is to the two Foreign Ministers. You said in your opening statements that you discussed the shifting power balance in Asia. Will it be possible in the decades ahead for the Minister’s Office: 02 6277 7500 or 0466 745 615 Department:02 6261 1555 10

United States to maintain its pre-eminent role in Asia and, if so, what sort of accommodations do you expect the United States and others will have to make in order to accommodate China and maintain the peace?

KEVIN RUDD: Firstly, let's be realistic about the United States. The United States today remains the world's largest economy and by a very significant margin. That will continue for at least the decade ahead.

Secondly, in terms of absolute military power, the United States is the dominant power globally by a country mile and again against any measures you'd care to choose, that is the case, both globally and within the Asia Pacific region.

Obviously the United States is currently engaged in its own force posture review which was the subject of considerable discussion with Stephen and myself and our American counterparts during AUSMIN in Melbourne in November.

However, I detect no sign whatsoever from our friends in the United States that you will see a diminution in the capacity of the United States to deploy force within the Asia Pacific region against particular contingencies in the future should they arise.

In terms of the other part of your question, and that concerns the rise of China, as you have heard me say on a number of occasions before, the critical challenge with emerging powers - China, India and others - is to craft in our part of the world a set of regional, institutional, architectural arrangements which enable us to have rules for the road - confidence in security building measures, measures which enhance a concept of common security in this region which does not have great institutional depth at present on a regional institutional basis.

That therefore lies very much as part of the challenge before us. It certainly was part of the discussions we had today with our British counterparts and that certainly remains a core challenge in the in-tray of the emerging work agenda of the East Asian Summit. Something which Australia will be very active in, something which the Americans will be active in but we also intend to be very active and collaborative in working that challenge through with our friends in Beijing as well.

WILLIAM HAGUE: I very strongly agree with what Kevin has said. I don't think there will be any diminution in the commitment of the United States in the Asia Pacific region. Certainly the diplomatic presence and commitment of the United States is being intensified and, by the way although it's not the point of your question, you will see in the coming years British diplomatic and ministerial activity intensified in South East Asia and other parts of the region.

So I don't think there is any doubt about that and we've discussed today the role of the East Asia Summit and frameworks for international cooperation in this region of the world.

I think Kevin has put forward many good ideas about that and that is the way to ensure that the various powers and interests and nations of the Asia Pacific are able to work productively and peacefully together.

KEVIN RUDD: Thank you. Next question. Minister’s Office: 02 6277 7500 or 0466 745 615 Department:02 6261 1555 11

QUESTION: A question to the Foreign Ministers please. Is there a risk of fresh hostility on the Korean Peninsula this year and, if so, how would you both urge China to respond?

KEVIN RUDD: Well, when it comes to the Korean Peninsula we welcome the most recent relaxation in tensions but, as someone who's been observing the DPRK's behaviour for the last quarter of a century, my single message to the international community is: don't hold your breath.

The bottom line is the regime in Pyongyang is inherently destabilising of the region because of its provocative actions against the South. These were not evidenced just on one occasion but on two significant occasions in the past six months or so and. secondly, the DPRK's continued nuclear program.

Therefore I think it's important for the entire region to be vigilant about DPRK behaviour in the year ahead, particularly when the DPRK appears to be in the process of one form or another of leadership transition.

We are actively engaged with our friends in Seoul on this question, with our friends in Tokyo on this question and with our friends in Beijing on this questions. Which brings us to the second part of your question and that is the role of China.

The Chinese President is currently visiting Washington, or is about to visit Washington I should say. for an important bilateral with President Obama. That will be an important meeting. I assume that the Korean Peninsula will form a prominent part of their discussions.

China does not control what the DPRK does. As any analyst of DPRK politics will tell you, China does have a capacity to influence, however, what the DPRK does. Particularly, in terms of the lengths betweens the People's Liberation Army and the Korean People's Army. And, as we said before publicly and we'll continue to say again publicly, it is important for China to play a continuing and increasingly strong role in causing Pyongyang and the military authorities in Pyongyang in particular, to adhere to international norms of security policy behaviour.

WILLIAM HAGUE: Well you can see as we run through these questions, a strong level of agreement on those foreign policy - I think all foreign policy issues between the UK and Australia. I don't have much to add to what Kevin has said.

The way to reduce the risks is for North Korea to desist from its proliferation activities, to refrain from the provocative kind of actions that we saw during the course of 2010. Yes, China has a role to play, all nations have a role to play, in urging North Korea to desist from those actions. China has an important role to play in that and then that is so