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Rio Tinto trial tests Australian diplomacy

Nick Bryant | 03:02 UK time, Monday, 22 March 2010

The trial has started of Stern Hu, the Australian national and Rio Tinto executive who, along with three colleagues, is facing allegations of bribery and corruption in a courthouse in Shanghai.

Foreign reporters have been barred from covering the proceedings, and there will not even be an Australian consular presence for parts of the trial which the Chinese say touches upon sensitive commercial information. So although Kevin Rudd has said that the world will be watching, the Chinese authorities have obscured the view. Transparent this trial most definitely is not.

Rio Tinto logo at company's Shanghai officesStern Hu was the Anglo-Australian mining giant's lead negotiator in the annual negotiations over iron ore prices with Chinese steel mills. Many in Australia complain that his arrest was an act of retaliation from the Chinese authorities after the collapse last year of a A$20bn bid for a stake in Rio Tinto from the government-owned Chinalco.

The policy throughout from both the Australian government and the Ango-Australian mining giant, Rio Tinto, has been to minimise the diplomatic and commercial fall-out. Since Stern Hu's arrest last July, Rio has not only tried to maintain its highly-profitable commercial relationship with China but actively sought its expansion.

On Friday, on the very eve of the trial, Rio and Chinalco announced a joint venture to mine iron ore deposits in Guinea, West Africa. Moreover, at the same time that his colleagues will be on trial in Shanghai, Rio's chief executive, Tom Albanese, will be a guest of a Chinese government think tank in Beijing in a forum devoted to enhanced global cooperation. I'll update you on what he says on the subject of the trial. Up until now, Rio has issued statements protesting the innocence of its four employees, but kept to a minimum its public statements.

The thinking of both Rio and Kevin Rudd would appear to be that this softly-softly approach is the most sensible way to deal with Beijing, and that being more openly critical would ultimately prove counterproductive.

Yet for some foreign policy commentators here, the episode has offered up a profile of Australian diplomatic impotence. Here's Greg Sheridan, the foreign editor of The Australian. "Governments in Canberra are always scared of annoying Beijing, and have a well-earned reputation for poltroonery in Washington, Delhi and Tokyo." Poltroonery is cowardice. As Sheridan points out, neither Kevin Rudd or his deputy Julia Gillard met with the Dalai Lama when he visited Australia last December, a conciliatory gesture towards Beijing that does not appear to have been reciprocated in the handling of Hu's case.

This blog has observed before that Australia is geographically, diplomatically and economically well-placed to play a key role as the Asia-Pacific century continues to play out. Its positioned to act as an interlocutor between China and America, in much the same way that Britain has often acted as a bridge between the US and Europe. The topic of China was set to loom large, for instance, during the now-postponed visit from Barack Obama.

Yet the Stern Hu case has shown the limits of Canberra's influence in Beijing. Australia may well have the most Sino-centric Prime Minister in its history, but Kevin Rudd's much-vaunted fluency in mandarin does not appear to have translated into genuine sway with the Chinese government.

With the Obama visit now provisionally rescheduled for June, Greg Sheridan has come up with an interesting way to test the weight of Australia's diplomatic punch. "[H]ere is one simple way for the American president to gauge whether Rudd has the slightest influence with the Chinese. If Stern Hu is still in jail, then it will be clear that Australia's influence in Beijing is as close to zero as you could possibly imagine."

PS Lots of politics over the weekend, especially for readers in Tasmania, where it looks like Labor has lost power, and South Australia, where it looks like an embattled Premier, Mike Rann, has just held on. It could be a few more days before we know the final results, so I plan to blog then.


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