Transcript
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John Morrell: Welcome to the Democracy That Delivers podcast. This is John Morrell, the Asia Pacific director at CIPE. In today’s episode, we’re going to talk about Southeast Asia and the Pacific from the perspective of Australia. Our conversation today is with Bill Costello, currently serving as Assistant Secretary for Southeast Asia Development and Programs with the Australian Department of Foreign Affairs and Trade and former Australian ambassador to Timor-Leste. I first met Bill when he was serving in the Australian Embassy in Washington, D.C. He is a friend of mine, a friend of CIPE, and a true friend of the U.S., so we’re thrilled that he’s joining us today. Bill, welcome.
Bill Costello: Thank you, John. Thanks for inviting me; it’s nice to be with you.
John Morrell: Let’s talk first about your current work on Southeast Asia. It’s interesting that, if you look at the geography, Taiwan has its Southbound Policy that prioritizes ASEAN, and India has its Look East policy. Everybody is looking at Southeast Asia — the policy names just depend on which direction you’re looking from. ASEAN’s population is about 700 million people, its GDP is about $4 trillion U.S., and both are growing rapidly. I don’t know if Australia has a “Look North” policy, but what are Australia’s priorities in Southeast Asia?
Bill Costello: Thanks, John. We don’t call it a Look North policy; we see ourselves situated in the region. Australia’s interests, security, prosperity, and economic future are intrinsically linked to Southeast Asia. Geography puts us close together, but we also have enduring ties across family, business, education, and tourism. We see ourselves as a long-standing, reliable partner for Southeast Asia.
We are prioritizing our region, including very pivotally Southeast Asia, which we see as strategically pivotal at the moment. It is very much on the front line of competition between the major powers. We are focused on investing in our relationships, strengthening the rules that protect the region, and deepening our engagement — including on the economic front. Our government has an economic strategy to 2040 called Invested, which is all about making sure Australian business is investing in the region commensurate with the growth potential we see there. That strategy was launched by our Prime Minister at a summit we hosted in 2024 for all ASEAN leaders, largely because those leaders have asked for more investment from a range of sources.
John Morrell: Southeast Asia presents a juxtaposition of countries like Singapore and the Philippines with countries like Myanmar, showing just how heterogeneous the region is. With that caveat in mind, what are some of the trends in the region that you’re keeping an eye on?
Bill Costello: You’re right about the diversity, but there are some identifiable trends. Starting with the economic, most of these countries have grown through export-led strategies. One big uncertainty is how trade will look in the future and what their sources of growth will be. There is a lot of effort to diversify trading arrangements.
On the geostrategic front, these countries have always been “hedgers” — they don’t want to align themselves closely to any one major party. They want autonomy. Australia seeks to support that autonomy and agency so they can make their own choices.
I’ll also mention climate and energy. These countries are very seized of climate-related risks and natural disasters. They need more energy to grow their economies, but they are also interested in transitioning to cleaner, greener sources. Finally, there are demographic issues. While some have young populations, many middle-income countries in Southeast Asia are facing aging populations and the associated challenges for labor markets and the care economy.
John Morrell: You mentioned Myanmar, where the situation continues to deteriorate in a heartbreaking way. What are Australia’s priorities there, and how do you engage in such a complex situation?
Bill Costello: Australia has grave concerns about the political and humanitarian crisis in Myanmar. We continue to call for a cessation of violence, the release of unjustly detained prisoners, safe humanitarian access, and inclusive dialogue. We support ASEAN’s central role in seeking to resolve the crisis and stand with the people of Myanmar through advocacy and assistance. This year, we are providing around $125 million Australian dollars — just short of $100 million U.S. — in assistance. We deliver this through civil society partners and the UN system rather than through the government. The situation is also extremely dire for the Rohingya population in Cox’s Bazar, who were forcibly expelled several years ago.
John Morrell: There are also positive stories, including Timor-Leste, which formally ascended as ASEAN’s 11th member late last year. What is your assessment of Timor-Leste now being a member?
Bill Costello: Australia actively supported Timor-Leste joining ASEAN through advocacy and capacity building. We see many benefits, particularly because it now joins a collective voice in the region. It will bring strong democratic credentials to ASEAN — it is a highly functioning democracy, even if it is not yet functioning at that level economically. Over time, economic integration will materially help Timor-Leste’s development prospects and provide a set of standards for rules and regulations.
John Morrell: Much of the support for that ascension process must have happened while you were the ambassador. What are you most proud of from your service in Timor-Leste?
Bill Costello: I’m proud of helping bring Timor-Leste to the top tier of foreign policy considerations for Australia. It is a very near neighbor — only a 45-minute flight from Darwin. We’ve opened avenues for labor mobility, focused on skills formation for their young population, and worked on developing shared oil and gas resources. We’ve also helped build infrastructure, including their first undersea fiber-optic cable so they could have decent internet for the first time.
John Morrell: Those are visionary investments. Moving to the broader Pacific, Foreign Minister Penny Wong recently said that Australia and China are in a state of “permanent contest” in the region. How does Australia assess this contest today?
Bill Costello: We are a Pacific nation and a member of the Pacific Islands Forum. We aim to be the partner that other Pacific countries can count on. We are the largest development partner by some margin and aim to remain the security partner of choice.
We seek to play to our strengths through creative diplomacy. For example, we have a Papua New Guinea (PNG) team in our National Rugby League. For Papua New Guineans, rugby league is almost a religion, so that creates a powerful tie. We’ve also signed the Falepili Union treaty with Tuvalu, which provides a migration pathway and development support for those vulnerable to climate change. Most recently, we signed a defense treaty with PNG known as the Pukpuk Treaty. PNG is now formally a defense ally of ours, alongside the U.S. and New Zealand.
John Morrell: Is the PNG treaty as big of a deal as it seems? It puts PNG on the same level as the U.S. and New Zealand in terms of a mutual defense alliance.
Bill Costello: It is a big deal and signifies our commitment to each other’s security. We are working in an increasingly integrated way; we even have a senior PNG officer as a deputy commander of one of our brigades, commanding Australian personnel. We are helping them build defense infrastructure and maintaining a very close, candid dialogue.
John Morrell: CIPE has operated where Australian and U.S. foreign policy intersect, with work in PNG jointly funded by DFAT and the State Department. How can our two countries support each other in the Pacific?
Bill Costello: By being responsive to the priorities of the Pacific. I’d highlight the importance of the Freely Associated States — the Compact states — in the North Pacific: the Marshall Islands, Micronesia, and Palau. The U.S. has strong historical ties and significant obligations there, and those renegotiated arrangements are very much in our shared interest.
The U.S. also brings great institutional partnerships, like the Coast Guard, which is highly relevant to countries patrolling the “Blue Pacific”. Additionally, the U.S. is a player in the tuna industry and has large Pacific diaspora populations.
John Morrell: My last question regards foreign assistance. The U.S. is going through a transition where aid is being integrated more closely with the State Department, similar to what Australia did a decade ago when AusAID was integrated into DFAT. Any lessons to share?
Bill Costello: We did a “deep integration,” meaning responsibilities for foreign assistance were placed in the same divisions managing foreign policy and trade. Our ambassadors now have direct accountability for delivering development programs.
The main thing to watch is capability. You need specific expertise to deliver programs worth hundreds of millions of dollars. Another enduring challenge is interagency coordination — what we call “whole-of-government” coordination. In the U.S., State still has to work with the DFC, the military (Indo-PACOM), and the U.S. Trade and Development Agency. Our Foreign Minister now speaks of using “all tools of statecraft,” including universities, sports diplomacy, and church connections. You have to keep careful attention to that coordination even as you manage internal integration.
John Morrell: Bill, this has been a fun conversation and it’s been great catching up. We very much appreciate you taking the time.
Bill Costello: Been a pleasure, John. Thanks very much.
