Former Labor prime minister says there should be greater independence within alliance and South China Sea ‘is not our fight’

Australia’s “client state” obsequiousness towards the US was damaging its own interests and ignoring the rise of China as the nascent “primary economic state of the world”, Paul Keating has argued.

Speaking at the Lowy Institute in Sydney, the former Labor prime minister said the alliance with the US did not mandate slavish devotion to American demands “as the Uriah Heeps of this world” – a reference to Dickens’ fulsome character from David Copperfield.

“The alliance, if we had no document anymore, we would remain friends with the United States into the future. We’ve been in every battle [alongside the US] since the first world war. We’ve got a whole lot of cultural and historical common ground but this idea [exists] that we, as a sort of client state, have to shape up all the time or ship out – a view that is pretty much ingrained these days in Canberra – we have to get along with them otherwise they’ll shoo us away.

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“Look at the French attacks on the US over Iraq and yet France enjoys a normal relationship with the United States today. The Canadians the same.

“This idea that we’ve got to be the Uriah Heeps of this world, dragging along behind them. We should be running an altogether independent foreign policy, with much more independence within the alliance structure.

“Australia should be putting its interests first.”

Keating said he remained strongly supportive of the US alliance and that he was misquoted in November as saying Australia should “cut the tag” with America. He insisted he said Australia had “tag-along rights” with the US and that Australia should have greater rights than simply permission to “tag along”.

Keating said “a little bit of self-reflection” would benefit the US in its foreign policy, citing failed interventions – military and political – in Vietnam, Iran, India and Iraq.

“This is a state which has done fantastic things for the world but also makes mistakes. And therefore Australia should be putting its interests first, in the context of this alliance, which is never going to fade away.”

Australia, if too closely beholden to the US, risked getting involved “in another one of their skirmishes” – in particular, a looming showdown over Chinese island-building in the South China Sea.

“What China is doing in the South China Sea, they’re marking out the space like a tiger does. A tiger rubs itself against the trees and then, when any other one turns up, [it knows] ‘this is our space’.”

The build-up of the islands, which are being steadily developed and militarised by China in defiance of a ruling from the permanent court of arbitration in The Hague that the activity was illegal, was “a fact of life” now, Keating said.

The foreign affairs minister, Julie Bishop, has speculated about joint freedom of navigation naval exercises by Australia and allies in the South China Sea. Keating said the exercises would be unhelpful and inflammatory.

“The idea that we go steaming through the South China Sea ... in a fight that’s not our fight, this is not our fight. Telling the Americans, ‘This is not our fight and we’re not in it’, is something we should do.”

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In a temporally and geographically wide-ranging discussion with the current and former executive directors of the Lowy Institute, Michael Fullilove and Allan Gyngell, Keating argued the economic and strategic rise of China was without precedent in human history.

China would never be a “strategic client” of the US, he said.

“It’s a nonsense. China is returning to where it was before the industrial revolution. It’s returning to be the primary economic state of the world.”

Keating said the fundamental driver of Australian foreign policy over generations had been one of “fear of abandonment” by a great and powerful friend – in succession the UK and the US.

But, as a middle power in the 21st century, Australia needed to be constructionist in developing the effectiveness of multilateral forums such as Asean and the East Asia Summit.

“Self-reliance and helping ourselves should be the keynote of our foreign policy … a clever state does this dance, it’s only the dumb states that get caught up in some kind of signalling system of the kind we’ve always seem to have found ourselves in.”