New Zealand is pleased to provide its views on the outlook for regional security in 2001. The Annual Security Outlook is a valuable contribution to transparency and confidence building among members of the ARF.

Developments in the region in the last year

Over the past 12 months the region has, in New Zealand's view, remained basically stable, though there are elements of instability that cause us some concern. There are still encouraging signs in many parts of the region of a cautious return to economic stability, based in large part on policies that have addressed the economic and social consequences of the region's financial crisis. In the longer term developments in the region's largest economies will have an important impact on the prospects for economic growth and prosperity in the region. Efforts to establish sub-regional economic relationships are also a significant element of long-term prosperity. Events in the region over the last few years have shown that economic and social stability are crucial and that without them there is a high risk of political uncertainty undermining the basis of peace and security.

The basis of political and military stability in the region is engagement and stable relations between its constituent parts. There are no major military conflicts in the region at present and no large-scale armed confrontation, though the region is not without territorial disputes and periodic cross-border fighting. The overall tone of the region's security is set by the state of relations between the major players. Political change in any of those countries can lead to readjustment in the interplay between the region's largest and most powerful members. Engagement between the United States and China and harmonious relations between those two countries is important for the region's stability. Positive relations between Japan and China and Japan's close relationship with the United States are also significant components of the overall positive backdrop for the region. It should be noted, however, that events in Indonesia and the Southwest Pacific over the last twelve months have led to concerns about ongoing stability in those parts of the region.

New Zealand continues to believe that the multilateral process is essential for collective security in region. The strengthening of regional institutions, efforts by ASEAN members to strengthen the institutions of ASEAN and to consolidate the dialogue with countries in North Asia, are welcome signs that regionalism is alive and healthy. Taking advantage of the opportunities offered by globalisation is an important challenge facing the region. The management of transnational crime is another area where the region needs to cooperate and closely coordinate its efforts. The ARF has addressed both globalisation and management of transnational crime as important aspects of regional security. The Forum has consolidated its function as the prime focus for the exchange of views on security issues and has made good progress in exploring practical steps for building confidence between countries. New Zealand believes the ARF has an important role to play in addressing the region's security concerns as they arise.

Current regional issues

ARF attention has focused on a number of regional issues over the past 12 months. There has been a series of positive developments on the Korean peninsula. Developments on the peninsula have the potential to affect stability in the region. The prospects for closer contact between the ROK and the DPRK have taken a big step forward as a result of the inter-Korean Summit and the greater engagement of the DPRK in regional affairs. New Zealand looks forward to a further inter-Korean summit taking place. A number of countries have made efforts to assist in the reduction of tensions on the peninsula. Management of nuclear and missile developments in the DPRK remains an important factor in maintaining the momentum of improvements that have taken place over the last year. New Zealand has recently established diplomatic relations with the DPRK, as have a number of other countries, and looks forward to engaging with the DPRK on a range of issues of mutual interest.

New Zealand attaches great importance to ensuring there is no disruption to traffic in the shipping lanes that pass through the South China Sea. New Zealand is not party to competing claims to territory in the South China Sea and believes that any conflicting territorial claims should be resolved peacefully and through contact between the parties involved. It is encouraging that ASEAN and China have been working towards concluding a Code of Conduct for the South China Sea.

New Zealand believes that the success of Indonesia's transition to democracy and of its programme of economic reform, as well as peaceful resolution of internal conflicts are important for the region. It is important that countries in the region and the international community remain engaged and supportive of Indonesia's efforts.

The situation in East Timor has improved significantly under UNTAET, with humanitarian assistance and peacekeeping efforts provided by countries in the region and beyond. East Timor faces the challenge of establishing a stable, democratic and economically viable nation. It will require significant assistance from the international community and it will be essential that a United Nations civilian and military presence continue in East Timor after independence. Refugee and militia problems in West Timor continue to pose a threat to East Timor's security and it is important that these problems be resolved quickly. This will enable those East Timorese who wish to do so to return to East Timor to vote in the elections in August 200 I. New Zealand continues to urge that those responsible for murder of UN personnel in East and West Timor, as well as those responsible for human rights violations committed in East Timor in 1999, should be prosecuted in accordance with the seriousness of the crimes committed. The light sentences imposed on the six men in respect of the murder of UNHCR workers in West Timor in September 2000 are quite contrary to international expectations.

For the past twelve months the Southwest Pacific has also had its share of instability. Efforts are continuing to find a long-term solution to the conflict in Bougainville and there is some forward momentum there. Fiji and Solomon Islands have been shaken by serious ethnic and tribal conflicts. Fiji has suffered grave disruptions to its democratic governance and now faces the challenge of restoring constitutional rights to all Fijians when elections are held in August 2001. An International Peace Monitoring Team is working to consolidate the success of the Townsville Peace Agreement in bringing to an end fighting between parties to the conflict in Solomon Islands. Assistance from the international community will be necessary to address a serious economic decline in that country.

The Asia-Pacific region provides illustrations of the increase world- wide in the number of conflicts within states, usually of an ethnic, communal or religious nature. When such conflicts get out of hand, countries often seek assistance from the United Nations or the international community. The United Nations Secretary-General has taken a new look at the issues involved in peacekeeping. New Zealand welcomes the recommendations of the Brahimi Report and the attention it gives to conflict prevention. As the recommendations of the Brahimi Report are implemented, the United Nations and the international community will have at its disposal much more effective peace support measures.

The proliferation of weapons of mass destruction is an ongoing threat to our region. It is essential that the international community renew its efforts in the field of disarmament and non-proliferation relating to nuclear, chemical and biological weapons. New Zealand is concerned about any actions that have the potential to undermine the multilateral nuclear disarmament agenda or lead to a new nuclear arms race. New Zealand hopes that dialogue between the United States, Russia and China on missile defence will minimise any such impact. Combating the spread of missile technology will require stronger application of the treaty regimes on weapons of mass destruction, strict controls on access to missile technologies and concerted efforts to roll back programs in countries of concern.

The region also faces the threat of transnational organised crime. Transnational approaches are required to deal with this growing problem. The ARF has considered the number of transnational crimes, including piracy, illegal trade in small arms and illegal migration. It has also looked at the regional dimension to these problems and at where it can add to existing regional and international initiatives to deal with the problem. It will be important for ARF members to ensure that there is support for the United Nations Convention on Transnational Organised Crime and its associated Protocols, and active participation in the United Nations Conference on the Illegal Trade in Small Anus and Light Weapons in All its Aspects to be held in July 2001.

Domestic developments

• to protect New Zealand's territorial sovereignty;

• to meet our alliance commitments to Australia by maintaining a close defence partnership in pursuit of common security interests;

• to assist in the maintenance of security in the South Pacific and to provide assistance to our Pacific neighbours;

• to play an appropriate role in the maintenance of security in the Asia- Pacific region, including meeting our obligations as a member of the Five Power Defence Arrangements;

• to contribute to global security and peacekeeping through participation in the full range of United Nations and other appropriate multilateral peace support and humanitarian relief operations.

New Zealand is committed to the multilateral process and to playing its role in maintaining peace and stability in the Asia-Pacific region and beyond. The New Zealand government has, over the past 12 months, undertaken a review of its defence policy and defence capabilities. It believes in a comprehensive approach to security. New Zealand's defence policy objectives are:

Through a thorough assessment of New Zealand's defence and security needs, the government has set a course for its defence effort, concentrating defence resources in a range of affordable and sustainable military capabilities which will enable New Zealand to meet its needs and make an appropriate contribution internationally when required.