Economic crisis is not something that can be overcome easily or without painful decisions - David Capie

Prof. David Capie, an academic from New Zealand specialized in international relations, shared his views in an interview by e-mail with Daily Mirror. He responds to questions on how small nations like Sri Lanka and Zealand can benefit from their strategic positioning while balancing out ties with major powers like the United States and China. Also, he offers insights from New Zealand from its own experience in overcoming the economic crisis.

 He is Director of the Centre for Strategic Studies and Professor of International Relations. His research interests focus on conflict and security issues, particularly in the Asia–Pacific, and New Zealand’s foreign and defence policy. He has authored or co-authored three books and numerous articles and book chapters. His research has been supported by the Rockefeller Foundation, the East-West Center and the Royal Society of New Zealand’s Marsden Fund. David has held visiting positions at the Weatherhead Center for International Affairs at Harvard University and at LUIS Guido Carli in Rome. He was regional co-chair of the Council for Security Cooperation in the Asia-Pacific (CSCAP) from 2020 until 2022 and was a member of the ASEAN Regional Forum Experts and Eminent Persons Group from 2012 to 2019.

New Zealand chose a radical course of reform that abolished government subsidies, floated the New Zealand dollar, privatized some sectors, and opened up what had been a heavily protected economy to the world

Q  New Zealand set up its mission in Sri Lanka quite recently. How has it helped elevate bilateral ties?

I think one of the lessons of the Covid pandemic has to be that while you can do a lot of things virtually, nothing beats face to face interaction. Having a High Commission in Colombo is a tangible sign of the importance of the relationship to New Zealand. We’re a small country, so we need to choose carefully where we can have embassies and High Commissions. Having a physical presence lets New Zealand representatives hear directly from Sri Lanka’s government and people, listen to their concerns, and also share our perspectives. It makes it possible to build deep relationships in a way that’s hard to do when you can only fly in and visit for a short time.

Q  Both Sri Lanka and New Zealand are small nations with strategic positioning. How can the two countries cooperate with each other to navigate competing interests of the major global players such as the United States, China, Japan and India?

Obviously New Zealand and Sri Lanka are in very different parts of the world, but we are both small maritime states. Small countries, with limited power, benefit most from a world in which disagreements are resolved peacefully and following international law. I also think we also have an interest in supporting inclusive arrangements that means that all states – not just the great powers – get a voice in how the Indo-Pacific region is governed.

Q  New Zealand, as an island nation featured in the Indo-Pacific strategy, maintains security ties with the United States while having excellent trading ties with China. What insights can New Zealand offer to Sri Lanka which is a country attempting to balance its ties with the major powers, including India, China and the US?

There’s no doubt that as relations between the big powers get more adversarial, life can also get more challenging for small countries trying to chart their own path. New Zealand is a liberal democracy with deep and longstanding political and security ties to the United States. China is also a vital economic partner, taking about a third of our exports. Those are different sorts of relationships, but both are very important. But in recent years, New Zealand governments have been increasingly concerned about some of China’s actions, for example in the South China Sea and the South Pacific. New Zealand has chosen to express concerns to China about those issues as matters of principle. We’re a small state that benefits from respect for international law – including the law of the sea. We also don’t want to see trade used as a weapon in a way that breaches international agreements. The New Zealand public also expects its governments to speak up about human rights issues. So we raise these issues as important expressions of our national interests and values, not just because any other country tells us to. China doesn’t like it, but raising differences openly, in a predictable and respectful way, is part of what the New Zealand government likes to call a “mature relationship”. But there’s no doubt it can be difficult at times.

There’s no doubt that as relations between the big powers get more adversarial, life can also get more challenging for small countries trying to chart their own path

Q  Sri Lanka is going through an economic crisis. New Zealand also went through similar fiascos in the past but overcame them. How did you overcome them, and what lessons can you share with Sri Lanka?

New Zealand went through a deep economic and political crisis in the mid-1980s, when we were basically bankrupt. The new government chose a radical course of reform that abolished government subsidies, floated the New Zealand dollar, privatized some sectors, and opened up what had been a heavily protected economy to the world. It was initially painful, but most of it was essential. In agriculture for example, subsidies to farmers were abolished and some uneconomic farms went broke, but now New Zealand farmers are probably the most efficient anywhere in the world. Under the old system, a small number of people with import licenses got rich bringing goods into the country, while ordinary people paid more for the things they wanted. With economic reforms, the cost of lots of things dropped and consumers got a lot more choice. One of the biggest challenges in the New Zealand case was to push through with reforms quickly, and to prevent those with vested political and economic interests from getting in the way.

Q  You visited Sri Lanka recently. What are your takeaways for strategic, bilateral partnership?

It was hard not to be struck by just how hard Sri Lanka has been hit by the economic crisis. That is not something that can be overcome easily or without painful decisions. New Zealand has been through its own economic crises in the past and I think there might be some useful lessons about policy reform and how we made our economy more open to the world that can be usefully shared. But perhaps the main personal takeaway for me was the incredible resilience and talent of the young people we met with. Despite the challenges, that left me optimistic about Sri Lanka’s future.