JIM MIDDLETON, PRESENTER: For the past decade, Australia has hitched its economic wagon to China and the relationship has underpinned a protracted surge in growth.
But what about the other emerging powerhouse, India?
Despite ties going back to the start of European settlement in Australia, relations between New Delhi and Canberra have yet to achieve full throttle.
Peter Varghese heads Australia's Department of Foreign Affairs and Trade, and immediately before that was High Commissioner to India.
He's just delivered the Australia India Institute's oration on the subject of Australia's journey with India.
Peter Varghese very good to be talking to you.
PETER VARGHESE, SECRETARY, AUSTRALIAN DEPARTMENT OF FOREIGN AFFAIRS AND TRADE: Pleasure to be here.
JIM MIDDLETON: Before we get onto India and India-Australia, a couple of immediate topics if I may. Fiji first of all; this war of words which has erupted between Australia and the Bainimarama regime. Bob Carr, Foreign Minister, criticising Fiji for rejecting Australia's nominee as High Commissioner and Suva accusing Australia of unwarranted posturing; this is a big setback in what seemed to be grounds for optimism in the redevelopment of relations.
PETER VARGHESE: Well Jim, we want to see Fiji return to democracy. I think that will be the best thing for Fiji, it will be the best thing for Fijians. We will continue to do what we can to encourage the leadership in Fiji to stick to its commitment to hold elections in 2014.
Now, along the way, there may well be times when we have differences of view and we will deal with them. But I think that the important thing is to keep our eye on the main game, which is for elections to be held, for that process to be credible and for an outcome which serves the interests of the people of Fiji.
JIM MIDDLETON: This has now gone on for such a long time. You’d have to be forgiven for thinking that perhaps Commodore Bainimarama prefers it this way - getting Australian aid but Australia is a convenient whipping boy for domestic consumption?
PETER VARGHESE: Well, Australian aid is there to help the people of Fiji, and I don't think anything would be achieved by withdrawing our aid from Fiji. That would only hurt the people of Fiji, and I don't think that is in anybody's interests.
I think we should take at face value what Mr Bainimarama is saying about his commitment to the 2014 election. And I think we need to do everything we can to encourage that process to be a credible process.
JIM MIDDLETON: On another subject, Papua New Guinea, Prime Minister Julia Gillard was there just very recently, talking about the need to develop a relationship that goes beyond aid.
Peter O'Neill, the PNG prime minister appealed again to Australia for assistance from the Government in developing PNG's creaking infrastructure and extending it. Why won't Australia come to the party in the way in which he would like?
PETER VARGHESE: Well Jim, we do a lot in PNG on the infrastructure side, 37 per cent of our aid program to PNG, which is our second largest aid program globally, goes towards infrastructure. And I think during the Prime Minister’s visit, we were able to reach an agreement with the government of PNG about what more we might be able to do in this area.
We have agreed to work with PNG on a scoping study for the three large infrastructure projects that prime minister O'Neill is very interested in. We have agreed to work with PNG to set up a infrastructure authority. I mean these are important institutions I think to manage infrastructure in PNG. That is not to say that aid won't continue to be an important element of the relationship, but PNG now is going down the path of major resource projects and that inevitably will have an impact on its economy, on its revenue flow and on the way in which it spends money.
JIM MIDDLETON: You're one of those people who is very optimistic about the ability of the United States and China to reach a modus vivendi, as it were, in what you termed and is increasingly called the Indo Pacific. But in recent days we have seen a defence white paper from Beijing accusing the United States, effectively, of hostility in its increased emphasis, reemphasis on the Pacific. Also Washington directly accusing Beijing of being behind cyber-warfare. These are signs are they not of just how difficult it could be in reaching such a modus vivendi?
PETER VARGHESE: Well it’s a complicated relationship. I think increasingly all of our relationships with China will become more complicated to this extent, that they bring together not just economic opportunity, which is clearly in everyone's interests, but we also have to grapple with a very changing strategic environment. So I don't think we should expect that we're all going to agree on everything every day.
We are realistic about the US/China relationship. We think that the leadership in both countries have a very good understanding of the importance of that relationship. We think they have put in place structures up for dialogue which will stabilise the relationship. And I think inevitably when you do have differences of view, at least you have got a framework and a mechanism to deal with it. And ultimately I think it is in the interests of the United States and in the interests of China for that relationship to be constructive and for it to be mutually beneficial.
JIM MIDDLETON: Let's talk about India. You say that it is only when India finds the institutional horsepower of a great power that there's really a prospect of a substantial Australia/India strategic relationship. It could be a long wait given India's history to reach that point couldn't it?
PETER VARGHESE: I don't think we need to wait for that point before we build an important relationship with India. I mean I think we're doing that now. My remarks were really pitched at the point of having realistic expectations about India and India's capacity to play the role of a major power. I think we will see gradually India's capacity build in terms of its ability to play a bigger international role.
JIM MIDDLETON: One final question. You also say that Australia's strategic relations with India will always be less than an alliance, but why not an alliance? Australia has one with Indonesia which is very close, and Australia and India are both Indian Ocean powers where a lot of the strategic interplay of the 21st century is bound to happen. Why not formalise things in an alliance eventually?
PETER VARGHESE: The point I was making is that strategic autonomy, I think, is anchored in Indian strategic thinking. And I don't see India entering into an alliance with any country because I think they would see it as impeding their strategic autonomy. So I don't think the issue really arises in terms of the way in which India perceives its strategic interests and its strategic policy.
JIM MIDDLETON: Peter Varghese thank you very much indeed.
PETER VARGHESE: Thanks Jim.