Kuala Lumpur roundtable shines light on challenges for 'middle-powers'

During the 37th Asia Pacific Roundtable (APR) in Kuala Lumpur in June, I participated in a side event hosted by the Asia New Zealand Foundation. It was a Track II event involving next-generation thinkers, leading scholars and practitioners.

While a wide variety of topics were discussed, ranging from the rules-based order, middle power diplomacy, and AI regulation, one topic that particularly piqued my interest was that of middle power agency.

The increasingly complicated international system and intensifying great power rivalry seem to have reduced the options of middle power countries by forcing them to take sides.

Japan, for example, appears to be abandoning its post-war pacifist security tradition by raising its defence spending above its de facto cap of one percent, while other countries are still trying to hedge.

Are these middle powers slaves to the international system, or will they continue to be able to exert agency in the midst of intensifying competition?

New Zealand – a Pacific regional middle power reliant on its traditional security partners - is a good case study for exploring this question.

New Zealand is sandwiched between its security partners the US and Australia, and its largest trading partner, China.

Up until now, New Zealand has shown a generally cautious attitude towards new security architectures in the Indo-Pacific, balancing between states involved in mini-lateral security cooperation frameworks and those outside of them.  

However, the current government has adopted a more proactive stance – a “foreign policy reset”.

It expressed interest in joining the non-nuclear pillar of AUKUS in early 2024, has embarked upon a rapid programme of international engagement, and has continued the tradition of attending NATO’s annual summit as one of NATO’s key Indo-Pacific partners, along with Japan and South Korea.

Asia New Zealand Foundation Honorary Adviser Professor Thitinan Pongsudhirak addressing delegates at the the 37th Asia Pacific Roundtable

What is the driving force for New Zealand's foreign policy “reset”? Is it driven by changes in the international system and the reemergence of great power competition, or does it reflect changes in its foreign policy preference underpinned by its own interests and agency?

Answering this question requires having an understanding of New Zealand’s strategic culture.

Strategic culture refers to a shared understanding within a state that constrains policy options by influencing policy-makers’ perceptions. 

Decision-makers operate within a cultural framework, which affects how they interpret situations and decide on their course of action. Examining strategic culture is important since it provides a clue as to the scope of actions a government can take in a given situation.    

New Zealand’s strategic culture is often argued to entail a similar sense of vulnerability to that of Australia.

Both countries can be characterised by the wide discrepancy between the size of their territory and small population, which could result in the perceived insufficiency in their defence capability.

Yet, New Zealand is said to have a less intense perception of this vulnerability than Australia because New Zealand is more isolated and a long way from foreign countries. This geographical advantage is sometimes argued to have resulted in New Zealand having a less  “realist” foreign policy.

New Zealand’s strategic culture is in large part shaped by two elements: its traditional nuclear-free policy and a focus on the nearby South Pacific islands.

These two elements provide us with an understanding of the background of New Zealand’s cautious attitude towards the AUKUS programme.

First, New Zealand’s nuclear-free stance explains its reservations about AUKUS’s first pillar, which is to deliver nuclear-powered submarines to Australia.

Second, New Zealand’s traditional focus on South Pacific islands may be why certain New Zealand politicians worry that joining AUKUS would shift the national focus away from its core areas of responsibility. 

However, New Zealand’s stance on the second pillar of AUKUS changed last year under the current Luxon government, which took office in November 2023.

Foreign Minister Peters, in a joint statement with his US counterpart, mentioned that New Zealand can “see powerful reasons for New Zealand engaging practically with them.” 

Foreign Minister Judith Collins also remarked at Shangri-La Dialogue 2024, “New Zealand also welcomes AUKUS as an initiative to enhance regional security and stability.”

This is a step up from Prime Minister Ardern’s 2022 joint statement with the US entitled “A 21st-Century Partnership for the Pacific, the Indo-Pacific, and the World,” which noted the "shared commitment between New Zealand and AUKUS partners." 

This change reflects New Zealand's shifting understanding of the regional security environment.

Does this policy shift represent a change in New Zealand's strategic culture?

Taken together with a number of other policy statements, one could argue that New Zealand is transitioning from a broadly liberalist to a more realist strategic culture - though we cannot rule out future backtracking through political change.

While strategic culture is the product of certain set conditions such as geography, it is certainly not unchanging.

A sequence of strategic documents released in the summer of 2023 marked a watershed in the perception of the surrounding security environment. 

New Zealand published its first national security strategy document in August 2023, in which its threat assessment of the neighbouring region appeared remarkably different from statements only a few years prior.

At the press conference, then Defence Minister Andrew Little said, “In 2023 we do not live in a benign strategic environment…New Zealand is facing more geographical strategic challenges,” most likely referring to increasing tension between the US and China as well as the erosion of New Zealand’s psychological and geographical distance from such clashes.

This view was completed by the two other two documents.

The Ministry of Foreign Affairs and Trade issued the 2023 Strategic Foreign Policy Assessment “Navigating a shifting world.”

The document also showed an elevated threat perception, mentioning China’s more assertive attitudes in various fields, including diplomatic, security, economic, and development initiatives to pursue more influence.

This evaluation aligns with the intelligence side’s view, articulated in the first-ever unclassified assessment of New Zealand’s threat environment by the New Zealand Security Intelligence Service, where Chinese espionage and interference were highlighted.

The release of these key strategic documents perception indicates that not only the bureaucracy felt the urgent need to update New Zealand’s threat assessment, but also the majority of politicians.

Yet, not everyone agrees with this course of action in terms of AUKUS.

Former Prime Minister Helen Clark (New Zealand Labour Party) warned that New Zealand’s cooperation with AUKUS would undermine the country’s independent foreign policy.

Chris Hipkins, leader of the New Zealand Labour Party, even argues that the current government’s rush into AUKUS pillar two seems to lack an electoral mandate.

With the potential disagreements on joining the second pillar of AUKUS, New Zealand’s stance in the long term will depend on to what extent the bureaucracy and politicians are in sync.

In this field, through virtue of its role of policy implementation, the bureaucracy generally holds more continuity and inertia than politicians, which means that for at least a few years, New Zealand’s lean towards greater security cooperation with the US and Australia is highly likely.

The Foundation's Track II programme supports informal diplomacy with thinktanks in Asia on issues and challenges facing the region.

Our NextGen Track II programme offers opportunities for tertiary students and young professionals to kick start their future in foreign, trade and security policy through NextGen activity.