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Superforecasting and diplomacy

obama-trump

The day after Donald Trump effectively secured the Republican nomination for President, when Senator Ted Cruz withdrew from the race, back in the mists of time – 4 May 2016 – I conducted a snap poll amongst Australian diplomatic staff in Israel. The question posed: what odds did they now assign to Trump eventually winning the Presidency?

Some gave him odds as high as 60%. Some gave him as low as 2%. The average was 27% – not a bad prediction, all things considered. (Nate Silver, on the eve of the election, gave Trump a 30% chance of winning.)

After this snap poll, I distributed copies of Philip Tetlock and Dan Gardner’s excellent book, Superforecasting: The Art & Science of Prediction to each member of staff, and started reading it myself.

As I did so, an obvious realisation began to dawn. All diplomats are part of the ‘forecasting’ profession, but we do not spend much time at all consciously thinking about how we go about our forecasting, or how we might improve it.

We make (and are paid to make) judgements and assessments all the time about what the future is likely to hold, and its implications for Australia and Australian interests. But are we any good at it? How often do we get things right? Can we improve our performance?

I came away with several lessons and conclusions from my read of Superforecasting.

Firstly, the ‘forecasting’ business is deeply unprofessional, a little like the practice of medicine until the 20th century. There is no measurement, no data, no reviews or post-mortems (except in extreme cases – think Iraq WMD). Professional pundits are rarely assessed against their track record or held accountable for their failures of insight. With no assessment of effectiveness, there is no ability to identify which methods and tools work and which ones don’t, and hence no possibility of improvement.

Secondly, we offer judgements that are very squidgy. We tend to offer judgement and predictions in qualitative terms (“the risks of X are rising”), or as a description of factors at work (“on the one hand … on the other”), and often using indeterminate timeframes (“in the medium term”). The end result means that our prediction, whatever it is, is so hedged in with caveats, and so difficult to tie down, that it can never be proven wrong. As a result, our backs are covered, but the value of such analysis to decision-makers is limited.

Thirdly, we need to be more comfortable with degrees of likelihood, or probability, and less demanding for binary judgements. We often tend to say we think something is either likely to happen, or unlikely to happen, or could go either way (i.e. an even bet). But there is a world of difference (and hence implication) between saying something is 5% likely versus 40% likely. And if we say we think an event is 70% unlikely to happen, and it in fact happens, this does not mean our prediction is wrong – the corollary is that we thought there was a 30% likelihood of the event happening.

Fourthly, crowd-sourced judgements are nearly always better than that of an individual, no matter how talented or well-informed that individual. This is because of the asymmetry with which information is held, and the fact that countervailing biases tend to cancel one another out in large enough groups.

Newly-endowed with the wisdom gained from Superforecasting, the Embassy staff agreed to embark on a forecasting exercise on questions and topics that fell squarely within our work responsibilities.

We posed ourselves 33 questions, from domestic politics (will the composition of Israel’s government change? will a Palestinian unity government be formed?), to the peace-process (will direct, final-status negotiations resume?), to the risks of regional conflict involving Israel. Each of the questions is time-bound, and for each we were required to give an answer on  the basis of a percentage likelihood. We’ve structured the scoring to incentivise more confident answers (so someone who predicts something with a 90% likelihood gets more points than someone who predicts it with only a 60% likelihood, but conversely loses more points if their prediction turns out to be wrong).

One of the questions we asked ourselves, for instance, was the likelihood of a Resolution being adopted by the UN Security Council which condemned Israeli settlement activity before 20 January 2017 (we asked this question back in October). Some people put the odds of this as high as 60%; others as low as 5%; and the average (or crowd-sourced) answer was 33%. It turned out that this in fact happened  – UNSCR 2334 was adopted on 23 December 2016.

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Most of the questions have a timeframe out to 1 May 2017, so we will only be able to assess our effectiveness, and identify any hidden ‘superforecasters’ amongst us, at that point.

But already the exercise has fostered some fresh curiosity, and instilled some extra discipline, in our work.

It has thrown a light on what are the more important and consequential questions we need to answer, and the links between some of them.

We now throw around probabilities when we talk about scenarios (“80% likely”), rather than just reaching for qualitative terms whose ambiguity is high (“probable”).

We adjust our estimates in response to new developments and evidence, recognising that predictions cannot remain static.

Most importantly, it has instilled some humility. We’ve recognised that the future is, by definition, unknowable, and that even low-probability events will happen from time to time. As a result, we should never put too much faith in forecasts, and we should always be prepared for scenarios at odds with conventional wisdom. (And 2016 should have brought that home to all of us involved in some way in international politics.)

As a new Administration takes office in Washington, we have a whole new series of questions and scenarios to ponder, including in the Middle East. The forecasters will be busy.

 

Thomas Piketty’s Capital and the year 2016

Thomas Piketty’s study of income and wealth inequality, Capital in the Twenty-First Century, was a big hit in 2014. I got to it rather late, only in 2016. But as I ploughed through it, it occurred to me that Piketty’s book actually had a lot of insights to offer into the tumultuous political year we have just lived through.

Piketty has a lot of data and theory to offer on the current nature of income and wealth distribution in advanced western economies. (The Economist did a very good precis of his book, which you can find here: http://www.economist.com/blogs/freeexchange/2014/02/book-clubs). But his most insightful observations come with his review of economic history. If I came away with one conclusion, it is that the post-war golden age of steady economic growth, low inequality, shared prosperity, and high social cohesion may be grinding to an end.

Piketty points out that for most of modern human history, say from the year 0 to the year 1700, the world’s population, and the world’s economy, were basically stagnant. Population grew by about 0.1% per year, as did economic output, meaning that – on average – per capita incomes barely budged between the height of the Roman Empire and the dawn of the Industrial Revolution. Intuitively, I think we know this to be true – that the average standard of living of a subject of the Ottoman Empire in the year 1700 was not markedly different to his Roman cousin living during the time of Jesus.

When growth is so slow, both in demographic and economic terms, each generation tends to replicate itself – in terms of wealth, occupation, social class and economic structure. The children of blacksmiths become blacksmiths themselves. The land-owning gentry bequeath their wealth to their children. Domestic staff give birth to domestic staff; farmworkers to farmworkers. In such a society, inherited wealth matters greatly (since the economy grows little), social hierarchies are rigid (and largely reflect inherited wealth), and social mobility – the ability to climb social classes over the course of a generation or generations – is almost non-existent (usually achieved only through marriage). Expectations are low accordingly. People “know their place”. Of course, fortunes are still made and lost, but the macro picture is overwhelmingly static. This is the world which the characters of Jane Austen and Balzac inhabit, and which Piketty evokes.

This world began to change gradually around 1700, with the onset of the industrial revolution, and then in a more accelerated fashion in subsequent centuries. So in the 100 years from the outbreak of the First World War (1913) to 2012, world output grew by 3% per year on average, world population by 1.4% on average, and per capita income by 1.6%.

Though these low single-digit figures do not sound especially dramatic to our modern ears – and indeed are what we have come to expect of a modern and healthy economy – the cumulative effect has been transformative. Per capita output growth of 1.5% on an annual basis means that over the course of a generation (thirty years), the children are 50% wealthier than the parents. This implies major changes in lifestyle and employment. New goods, services and professions are created. New fortunes are made in new industries. Old industries are disrupted out of existence. We only need to look back to 1986, and think about the demise of Kodak and the rise of Apple since, to realise this is true. When coupled with strong demographic growth, the result is an exceptionally dynamic and fluid society, especially by the standards of most of human history.

The two factors together – strong demographic and strong economic growth – play an equalising role. They are a fount of opportunity, and break down the importance of inherited wealth. They generate avenues for the creation of new wealth. Every generation is different and must in some sense construct itself, rather than replicate its predecessor. In such a scenario, social hierarchies are fluid, not fixed; mobility is high; and the vagaries of birth are less important in determining one’s fate and station.

On top of this, the twentieth century was also a period of massive wealth destruction. Two world wars, hyperinflation, the Great Depression, physical devastation, and the wrenching social and policy changes needed to mobilise and wage ‘total war’ cut huge swathes through the fortunes of many, largely destroying the aristocratic and landowning classes of Europe. It was a great social leveller.

We tend to look back on the post-war period – with its high income equality, high social mobility, and high growth – as the norm. In fact, the last 70 years is more accurately viewed as the historical exception. And, as Piketty argues in his book, this golden age may be coming to an end. Inequalities in wealth and income distribution in wealthy western economies have been steadily widening over the past 30 years (the widening in Australia has been less than other western nations, but the trend is the same). Capital-to-income ratios are approaching 1910 levels. Wealthy economies may be shifting to a lower-growth path – one that may be more normal by historical standards, but which seems little short of stagnation on the basis of modern expectations. (Much here will turn on whether the ‘fourth industrial revolution’ – automation, AI and big data – is all it is cracked up to be, or a pale whimper when compared to the telegraph, railway, electricity and steam engine). And in a quasi-stagnant economy, inherited wealth will acquire a disproportionate importance in determining economic structures.

The picture Piketty paints is a sobering one, of an era of immense prosperity, equality, mobility and social harmony coming to an end. It is one where the benefits of economic growth increasingly accrue to the top-end of the income scale; where median incomes have not moved much in the past 30 years; where wealth is increasingly concentrated, and return on wealth is increasingly important as a source of income compared to paid work; and where one of the principal structural economic innovations of the twentieth century (and one which helped stave off the dire predictions of Marxism and class conflict), the emergence of a wealth-owning middle-class, is becoming increasingly squeezed.

As Piketty explains, the social compact which governs our nations today is built on the basis of meritocracy. We believe that inequalities based on individual talent and effort are justified or at the least acceptable; but that inequalities based on other factors (birth, social class, race, religion, inherited wealth) are much less so. In the decades that followed World War Two, work, study and application became the surest way to the top. The path was open to everyone. But if society is becoming less meritocratic, with less social mobility, our tolerance for these inequalities may begin to fray. Societies can certainly exist and function with high structural inequalities, but historically they have done so only with vastly different social compacts (usually some variant of what we would call the ‘class’ system, a set of rigid social hierarchies at odds with today’s norms and values).

It is fiendishly hard to characterise the global political upheavals of 2016 into a single category, or attribute them to a single set of factors. But I think what we are seeing, manifested in many different ways across many Western nations, are the political reverberations of the story which Piketty tells.

Rising insecurity; the sense of being ‘squeezed’; a loss of faith in the political system and institutions (and a belief they have been captured by certain groups); fading belief in meritocracy and social mobility; growing resentment towards ‘elites’; greater attachment to more traditional forms of identity – these are some of its manifestations. It is hard to characterise or diagnose politically, because it draws on the traditional well-springs of both the left and the right of politics. We tend to dismiss it as populism. In its policy prescriptions, it might well be, but the anxieties it reflects are held deeply, and find at least some of their basis in Piketty’s analysis.

Like all good books, Piketty’s Capital forces you to question whole swathes of received wisdom, and imagine alternative scenarios. What if the high productivity growth of the post war era does not return? What if economic inequality continues to grow? What if our political system is unable to adapt? Would we accept a society where meritocracy is no longer the main organizing principle? Piketty might not be right in his diagnosis, but the questions he poses are worth thinking about.

Disrupting the National Day

In three years in Israel, I’ve been to some truly great national day celebrations, and some not-so-great ones. They all follow a standard pattern: speeches, national anthems, flags, toasts, and a general reaffirmation of the importance of the bilateral relationship between country X and Israel.
I’ve got no objection to the formula as such, except that it is rather formulaic.
But I’m convinced – perhaps because I’ve spent too long in and amongst Israel’s start-up scene – that this product is ripe for an overhaul.
So this year, Australia is attempting to disrupt that most dogged of diplomatic institutions, the national day reception.
As a group and as a profession, we diplomats need to find new and better ways of communicating with the public and reaching our target audiences, in a much more crowded and contested media environment.
The old public communication methods – the press release, the speech, the on-the-record interview – are no longer enough. These set-pieces still have a role, but it is a shrinking one. As tools they are generally too slow, too clunky, too dry, and too mono-directional to keep pace with the modern media cycle or grab the public’s attention.
The more savvy diplomats are reaching for social media and other new media tools, and finding new ways to engage the public, create relevance, and have their message heard amongst the din.
The national day reception fits firmly within the old public diplomacy toolkit. It has a limited reach, the guests are always much the same, and it struggles to generate wider public interest or profile beyond the social pages, given its rather stale format.
This year, Australia is trying something different. We’re calling it Ozraeli – a brand that seeks to capture what is best about Australia, Israel, and our friendship and partnership.
Ozraeli is a month-long series of events to celebrate, in deed rather than word, what makes our two nations great.
Last Sunday we assembled a group of young Australian and Israeli volunteers to clean up a section of the shoreline on the Sea of Galilee. Over several hours we picked up and hauled away bags and bags of rubbish. We left behind a cleaner beach but also, we hope, some of the enthusiasm and can-do attitude which inspired the Clean Up Australia campaign.
On Friday we are introducing Australia’s most famous football code to Israel, and staging an Australian-rules football match in Park Hayarkon in Tel Aviv. There will be stands serving Australian football haute-cuisine (meat pies and sausage rolls) and the Australian national beverage, beer. A day at the footy is a quintessentially Australian experience, and we hope our Israeli friends will enjoy it as much as we do.
On 26 September we are holding the Ozraeli Gala event at the Peres Center in Jaffa. We’ll have Australian singers, comedians, musicians and of course food and beverages. Like our two countries, it is meant to be a fun and light-hearted, a celebration of our friendship. We are shaking up the guest list, asking people from all walks of life. My buddies from Hebrew class, the family vet, and my youngest daughter’s Gan teachers will be all be coming. We’re also giving free tickets away to the public, in an effort to get more engagement (tweet your best photo or meme about Australia and Israel to #Ozraeli).
We’ve also got three separate high-tech delegations visiting Israel this month, all looking for ways to partner with Israel’s innovation ecosystem to build new products, disrupt old business models, and improve society along the way.
And on top of this, Australian Foreign Minister visited Israel earlier this month, affirming the strong and enduring friendship between our countries. Though in the ‘old diplomacy’ category, visits remain a traditional but still highly effective means of diplomacy. And Minister Bishop also found time to drop by our Landing Pad in Tel Aviv and talk with Australian entrepreneurs in Israel.
All up, Ozraeli is a month of celebration of the partnership between Australia and Israel, and some of the national traits that make us such good friends. The informality. The energy. The humour. The diversity. We figure you don’t need the speeches, the flags, or the national anthems to celebrate this closest of friendships.
First published as a blog post in the Times of Israel, 20 September 2016 http://blogs.timesofisrael.com/rocking-a-new-diplomacy-with-ozraeli/

Digital Diplomacy: What Could Possibly Go Wrong?

Several weeks ago I participated in a Digital Diplomacy Conference hosted by Israel’s Ministry of Foreign Affairs. It was really quite a good event: participants from around the world, and both academics and practitioners.

I was given (or perhaps this is how I chose to interpret my role) the task of pouring some cold water on the buzz – to talk about some of the challenges and pitfalls in putting all the enthusiasm and good ideas into action.

As you may have noticed from my previous posts, I’m a big believer in the promise of social media for diplomats. I think it’s essential if diplomacy is to reinvent itself and remain relevant in the modern age. Diplomacy is about the exertion of influence, at the end of the day, and social media tools, used wisely, enable diplomats to wield greater influence.

But I’m not so naive as to believe that such activity is without risks, to both you personally and your government. Sometimes the evangelists (and I count myself amongst them), in our enthusiastic efforts to recruit disciples, tend to gloss over the possibility that a digital diplomacy effort might all end horribly, in a veritable train wreck.

As someone at the conference said quite sensibly (Chatham House rules prevent me from identifying them), part of the trick with social media is that you need to “seek the edge”. There is no point using new media to just broadcast old media messages. You need to be interesting, insightful and relevant if you are to build a platform of influence. You need to give personally. Sometimes you need to be controversial. At the very least you need to be prepared to weigh in on the controversial issues.

But when you are out there, always seeking the edge, at times you will inevitably find yourself dangling perilously over it. With that in mind, here are some maxims I try to keep in mind when using social media as a diplomat. (I can’t call them rules as such, as I break them too often. But they do provide some guidance.)

Firstly, remember your limits.

As a diplomat, you are an actor, not a commentator. You represent a government. Tempting as it is, you can’t just weigh in on a trending topic and vent your personal views. This is a particularly fraught area when it comes to domestic politics. Like all diplomats stationed here, I have my own views and judgements about political developments in Israel. But these are for conveying privately, to my capital. Unless Australia has a particular equity at stake in the debate, it’s not my job to weigh in publicly and applaud or criticise.

You are also jurisdictionally limited. It’s your job to defend, explain, sell and provide context for your own country and your country’s policies, but only to the extent they relate to or are relevant for the country in which you are stationed. You are not some sort of super-spokesperson at large. It’s perfectly appropriate for me, as Australia’s ambassador to Israel, to articulate our long-standing support for a two-state solution. But it’s not my role to comment on terrorist attacks in Turkey or the US presidential race – that’s for my colleagues in Ankara and Washington.

Remember also that social media is for communicating current policy, but not for policy-making. If you want to change the policy, you’ll need to do it through the normal channels and processes, and make the case through your headquarters. You can’t just announce it via Twitter.

Secondly, acknowledge the risks.

Some of these risks are the same as for other forms of media engagement. There’s the risk that, in your efforts to package policy in the most compelling way for a local audience, you’ll inadvertently create “daylight” between you and your capital. And there are few stories the media love more than seemingly inconsistent messages.

There’s the risk that, by engaging with a negative story, you might give it a new lease of life, rather than letting it die a natural death.

And then there’s the risk particular to social media: that you’ll engage with your critics and trolls in a way that quickly becomes unedifying and undignified. No matter how right you might think you are, and how ill-informed your critics, it’s nearly always best just to let it go.

Someone at the conference claimed that the “half-life” of digital mistakes was far shorter than those committed in the old, analogue world. Reflecting upon that assertion, I could not disagree more. As those harrowing stories of careers ruined by ill-advised social media commentary testify, a digital mistake has an almost omnipresent quality. It can live and scar your life forever.

Thirdly, don’t delude yourself that foreign ministries are anything other than conservative by nature.

There will be digital czars in every one of them telling you that the culture has changed, that experimentation is encouraged, that mistakes will be tolerated, and that a hundred flowers should bloom. They mean well by this. But until social media is embraced as a mainstream platform for diplomacy, rather than seen as a sideline activity for those eager and inclined, they will not have your back.

When I think of the digital diplomatic doyens out there, I struggle to find evidence that they have gained in career terms from their significant digital impact. Tom Fletcher, the UK’s former ambassador to Lebanon, has left the foreign service. Gerard Araud, France’s ambassador to the United States, is old enough and senior enough to get away with testing the limits (as he says himself, he has nothing to lose as this is his last job: http://www.ft.com/intl/cms/s/0/9b49c0a0-6e9b-11e5-8171-ba1968cf791a.html#slide0).

But for those of us in more modest professional positions, we need to be patient.

Test the limits, but do not seek to destroy them. Do what you can to encourage digital diplomacy to become more mainstream, and make it an integral part of career progression. Help identify champions and role models. And seize upon the young people in your organisations, whose digital literacy and enthusiasm is a force to be harnessed for change.

Sykes-Picot and the modern Middle East

Two mid-ranking diplomats from the early twentieth century, each of whom died in relatively obscurity, have received an astonishing amount of bad press of late. Their names? Mark Sykes and Francois Georges-Picot, the British and French negotiators of the infamous Sykes-Picot agreement.

Reading some accounts, you could be forgiven for concluding that these two gentlemen are the sole authors of the current turmoil, tragedy and deep instability plaguing the Middle East. There have been countless calls from informed commentators urging a ‘re-negotiation’ of Sykes-Picot as a panacea for the region.

It is true that the compact at the heart of Sykes-Picot, later elaborated and codified in the Treaties of Sevres and Lausanne, partitioned the Ottoman Empire into constituent ethnic and national units. In this sense, the legacy of Sykes-Picot lives on, for better and for worse, in today’s map of the Middle East.

But before we seize on the ghost of Sykes-Picot as both sinner and saviour, some context is called for.

The defeat of the Ottoman Empire on the battlefields of World War One inevitably meant the dismemberment of that empire into nation-states, just as it did for the Austro-Hungarian empire. Without a doubt, the state boundaries drawn up by the victorious powers were artificial and sub-optimal in places. But to put the blame for the turmoil of today’s Middle East solely onto Sykes-Picot is a colossal analytical failure.

It is to misrepresent what is an epochal challenge to the very system of sovereign nation-states in the Middle East as a mere series of border disputes. And it is to mislead us into the conclusion that some tweaking of national boundaries, and possibly the creation of a new state here and there, would readily bring peace to the Middle East. Alas, the truth is much more inconvenient.

The dominant form of political order in the Middle East for millennia has been one based on empires – a metropolitan power ruling over other peoples and territories, in a hierarchical fashion – or one based on faith or religion. Egyptians, Assyrians, Babylonians, Greeks, Persians and Romans – all contested and ruled the Middle East as imperial powers, whilst the Byzantines, Umayyads, Abbasids, Crusaders and Ottomans ruled as imperial and religious powers.

So when, following the defeat and collapse of the Ottoman Empire, a Westphalian model of sovereign and equal nation-states was introduced into the Middle East, it was an entirely unfamiliar and foreign concept for the region.

States were brought into being that, for the most part, had never once previously existed as sovereign entities. People were brought under the rule of a capital or a ruling class to whom they had never previously been subject. And the concept of national identity, so familiar to Europeans, had to be consciously formed, learnt and inculcated.

Europe’s transition from an international system based on monarchies and empires to one based around nation-states as the core geopolitical unit was bloody and prolonged, taking hundreds of years and costing millions of lives. It is still not entirely resolved.

Little wonder, then, that the transition in the Middle East is not proving to be an easy one.

The nation-state system in the Middle East is a fragile one. National identity, never strongly-rooted to begin with, has been steadily weakened by failures of national leadership. Against this loss of legitimacy, older and more resilient forms of identity – religion, tribe, sect, ethnicity, and even gender – are re-asserting themselves as the basis for political order.

This is the real struggle underway today in the Middle East. It’s the struggle for the survival of the modern nation-state system, against deep and historic forces that seek the return of the older forms of political order.

This is why ISIS made such a show of demolishing a sand-berm on the Iraq-Syria border in 2014 and proclaiming it the death-knell of Sykes-Picot. They wish to erase the borders from the map, dismantle the nation-state system in the Middle East, and re-establish a caliphate.

You can disagree about where Sykes and Picot plotted state boundaries on the map. But seeking to adjust these boundaries is a folly, its simplicity misleading. Such a prospect will only fuel further conflict, whilst doing little to address the underlying driver of state weakness.

In a region as ethnically and religiously diverse as the Middle East, no map can be drawn that will satisfy every national ambition (unless we are prepared to countenance decades of bloodshed, persecution, and population displacement).

Instead, the current nation-state system, with all its imperfections, needs to be bolstered and made to work better.

The sovereignty and territorial integrity of the constituent states of the Middle East must be reaffirmed. Governments in the Middle East require help in earning the legitimacy and trust that can only come with providing their citizens a measure of security, dignity and opportunity. And, within the system of current nation-states, the rights of minorities need to be affirmed, and their security strengthened.

Stabilising and then strengthening the nation-state as the basic geopolitical unit of the Middle East is no easy task. It will take decades, require patience, and may well be beyond the scope of outside powers. But it, and not Sykes-Picot 2.0, is the only durable pathway ahead.

Published as an OpEd in the Times of Israel on 26 May 2016.

Disruption and #DigitalDiplomacy

I’ve talked before about how new technology is disrupting diplomacy, undermining some of the traditional monopolies inherent in the trade, and making it a much more contested vocation (see https://ausambisrael.com/2015/06/29/diplomacy-in-the-digital-age/). It seems clear to me that we all need to update our business model if diplomats are to remain relevant in the conduct of diplomacy. To survive, we need to conceive of ourselves in a new role: as part lobbyist, part spokesperson, and part thinktank.

I’ve since been giving thought, though, to how innovation and disruption might be harnessed as a positive force for transformation. In other words, beyond the threats, what are the opportunities for diplomacy inherent in this new world? This is necessarily a work-in-progress. But some decent answers to this question are integral to any credible articulation of ‘digital diplomacy’.

To start with first principles, I tend to think of successful disruptive innovations as falling into one of three categories.

Firstly, there are those innovations that disintermediate – which cut out layers of intermediaries and successfully bring producers and consumers, or buyers and sellers, closer together. This is your eBay, your Amazon for books, or indeed even the Internet at large. The intermediaries suffer, but the producers and consumers both benefit.

Secondly, there are those innovations which harness a previously underutilised or unexploited resource. This is the sharing economy. Outfits like Airbnb have harnessed the stock of underutilised housing to disrupt the hotels sector; Uber is doing the same for transport; Flexicar and others are doing the same for the car rental business; Snapgoods is doing it for high-end household appliances; and more creative platforms such as Expert 360 are doing it for the labour force – tapping skilled workers who don’t want the restrictions of a job but nonetheless have surplus labour to sell.

Thirdly, there are those innovations which create a genuinely new category of product, and which create a new demand or market entirely. Think of Snapchat or Facebook or Twitter here: who would have guessed there was such a latent demand, previously unknown and untapped, for communicating in this way?

If we take these three categories of disruptive innovation and apply them to how we think about diplomacy, where does it lead us?

Let’s start with disintermediation. Viewed on the downside, this is in fact one of the biggest threats to a diplomats role. The ability of Presidents, Prime Ministers and Foreign Ministers to text, telephone and direct message one another is a great example of disintermediation – they are disintermediating diplomats out of one of our traditional roles, as a conduit for communication.

But there is also an upside. New communication tools, and especially social media, allow us diplomats to engage directly with the public in the country we are trying to influence, often in quite a targeted fashion. We are no longer forced to work through intermediaries, such as the mainstream media or the foreign ministry. We can now take our case, our point of view, to the public direct. To do so takes a degree of bravery and media savvy. It requires a stomach for public debate and confrontation, and a thick skin towards the inevitable trolls. And it requires a supportive government at home. But the tools are now there to engage our target audience in a more direct and focused fashion than previously. Used smartly – and the best ambassadors around the world do use these tools smartly – this can be a huge asset.

How about an underutilised asset? Well, the backbone of any diplomatic service is its overseas presence. We own a lot of bricks-and-mortar infrastructure around the world. The flag and the chancery, the titles and the flummery, still count for a lot, as do the secure premises, secure communications, networks and contacts, and local expertise.

This – the infrastructure of our overseas network – is the great, underutilised resource. We need to broaden our conception of an embassy beyond just a vehicle for engaging in traditional diplomacy and the conduct of foreign relations. We need to move beyond the bread-and-butter stuff of third person notes, formal diplomatic exchanges and negotiations, and set-piece discussions, usually conducted with the host foreign ministry.

We should be utilising our overseas presence as a platform and enabler to advance interests across a much broader spectrum, and for a much broader set of stakeholders . Trade and commercial diplomacy have always been traditional partners in this respect, but we need to look much further afield. Australia’s decision to establish high-tech ‘Landing Pads’ in Tel Aviv and San Francisco, to help emerging entrepreneurs engage these high-tech ecosystems, is a great example of the sort of creative thinking needed. These Landing Pads are about exploiting and adapting a traditional embassy presence to support a whole new set of clients, in a way that is non-traditional but nonetheless firmly in the national interest.

Once you begin to think of the embassy network as a backbone of enabling government support for a whole lot of other, non-foreign ministry, interactions, your horizons open immediately. You might use the embassy to support collaborations in areas as varied as youth mental health, or medical marijuana, or surf life-saving (some areas where the Australian Embassy in Tel Aviv has been active). These areas will depend on the complementarities and opportunities that exist, but the trick is to think of the embassy as a facilitator of productive interaction and a broker of relationships, and to get more value out of the overseas network.

Lastly, new products. I think there is still a pretty pronounced tendency amongst us diplomats to consider the diplomatic cable or telegram – with its searing analysis and nuanced judgements – as the gold standard of our product. (We all secretly hope to produce the modern-day version of the George Kennan despatch from Moscow, which provided the intellectual underpinnings of the Cold War containment strategy.) Undoubtedly the cable still has its place, but the readership for this product, especially amongst senior decision-makers, has been in decline for years. We are in a much more competitive information environment these days, and we cannot rely on the supposed supremacy of our product alone to guarantee our views a hearing. People simply don’t have the time.

As a result, we need to embrace new ways of communicating important information and analysis to our political masters and stakeholders at home. Sometimes a Tweet can be enough to draw direct attention to an issue of importance. Sometimes a WhatsApp group is the best way to keep people updated on a developing issue. Sometimes Wickr is the most surefire way of getting a message through. Sometimes an Instagram photo says more than 1000 words could. And sometimes just sending on or re-posting a particularly good piece of news analysis – with a comment or two – is all that an issue requires, rather than seeking to reinvent the wheel. And then of course there are text messages, phone calls and emails – all legitimate methods of communication.

There is still, and will remain, a time and place and audience for well-considered and insightful diplomatic cables, but this should not be our default method of communications. For many issues, it is too slow, clunky, cumbersome and limited in its reach. Instead we need to embrace the full spectrum of communications and think about where our audience is and how best to reach them, and select our medium accordingly. Choosing how to say something is as important as choosing what to say.

My conclusion? The threats to the traditional practice of diplomacy are real. But the same forces of disruption that threaten the old business model also present opportunities. Seizing these opportunities, discarding some traditions, but remaining true to the underlying purpose of diplomacy – that is the challenge facing us today.

Innovation and Israel: Lessons for Australia

When Israel’s Chief Scientist, Avi Hasson, touches down in Australia tomorrow for a week of meetings and events, he will find a ready audience.

Avi, as well as his title as Chief Scientist, is also the head of Israel’s National Innovation Authority, and it is this title which more aptly describes his role in Israel. Avi is like the chief executive of Israel’s innovation system, an official appointed by statute but  who enjoys powers more closely resembling those of a Minister. His job is to ensure the Israeli economy, the ‘Start Up Nation’, remains one of the most innovative in the world.

Avi will find an Australian economy at a turning point. Though still strong, our economy is coming off the highs of an historic mining and commodities boom. We are searching for the next engine of growth – one that makes us of our highly-educated workforce, is export-oriented, pays sufficiently well to maintain our living standards, and harnesses our natural advantages as a nation. For this, we need a more innovative, creative and entrepreneurial economy. Innovation has become the new buzzword in Australia, with the Prime Minister due to deliver a major Innovation Statement next month.

This is why the experience of Israel is so relevant to our current economic debate.

Israel is indeed an innovation powerhouse, on any metric. 50% of Israel’s exports are in high-tech. Israel spends an OECD-high of 4.2% of GDP on research and development (R&D). Last year Israel attracted almost $2 billion in venture capital, more than any other country (including the US) on a per capita basis. Over 275 big multinationals have established R&D facilities in Israel, from Apple to Alcatel, Google to Philips. Israel has the highest density of start-ups in the world, with 1 for every 2000 people, and more NASDAQ listings than any country bar the US and China. For a small country, Israel punches way above its weight on innovation.

But – and this is where it gets interesting – Israel did not become like this overnight. Israel was not always destined to be an innovative, high-tech economy; quite the opposite, in fact. In the early 1990s, Israel’s economy was sclerotic, inefficient, and overly centralised.

Only as a result of conscious national decisions, taken from the early 1990s onwards, when staring down the barrel of a crisis, did Israel’s economy begin to change. Today, Israel has one of the most competitive and productive innovation ecosystems in the world. But this system has been built and engineered every step of the way. A start-up scene did not just emerge organically. National policy and national leadership brought about this transformation, harnessing strengths but within a coherent and consistent framework, where the incentives were all aligned and the obstacles and disincentives removed.

What are the secrets to Israel’s innovation system? It is a question I have spent the better part of two years in Israel thinking about. I think the answer can be broken down into four C’s: culture, capital, coherence and clusters.

Firstly, culture. It is true that Israel has some unique national circumstances which – though we would not wish them upon any country – nonetheless have contributed to Israel’s risk-taking culture. A small nation, lacking natural resources and surrounded by hostility, can only survive by dint of ingenuity, cleverness, and a degree of ‘chutzpah’. In Israel, ideas are prized, experimentation and creativity are encouraged. Failure is seen as valuable experience, not a character blemish. Social hierarchy is almost non-existent, so good ideas can come from anywhere within an organisation. Compulsory military service in a high-technology army, and the large degree of autonomy given to young soldiers in the field, further contribute. The small size of the Israeli market gives rise to a ‘global from day one’ perspective.

Secondly, capital. The ready availability of early-stage, high-risk venture capital drives a vibrant and thriving innovation ecosystem – without this, risky but disruptive ideas (the possible ‘unicorns’) never emerge from someone’s sketch on the back of a napkin. Israel is not naturally endowed with capital – it’s a small economy in a geopolitically risky environment. But it has managed to create a thriving venture capital sector through two major government initiatives. The first was the Yozma program in the early 1990s, which created Israel’s VC industry from scratch.

The second is the series of programs and funds now run by the Office of the Chief Scientist, which provides financial support to early stage start-ups without taking equity. This helps drive a sizeable pipeline of deals to feed the VC industry at the next stage of development. The Office of the Chief Scientist manages a budget in the order of $450 million per year (this equates to about $1.5 billion in Australian terms, given the relative size of our economy) to support industrial R&D and early-stage start-ups. This might look at first blush like generous corporate welfare. But in fact this spending delivers a very high return on investment when viewed across the economy. The Chief Scientist calculates that every dollar it spends to support R&D generates an additional $1.50 in private sector R&D expenditure and translates into an additional $5 – $10 of GDP generated. It is seen as a good use of public money.

Competitive tax policies and settings, which encourage and privilege venture capital over other forms of investment – in recognition of the outsized multiplier effect such investment has on the rest of the economy – also play a part. Getting the optimal policy settings in areas such as crowd-sourced equity funding, tax treatment of angel investors, and employee share ownership (ESOP) schemes has been critical to Israel’s success.

Thirdly, coherence. Creating an innovative ecosystem requires getting the incentives right and removing roadblocks across the policy sphere. Taxation, industry policy, science, education, financial regulation, immigration – all these policy areas need to be aligned. In Israel, Avi Hasson and his office provide the single point of accountability and responsibility within Israel for supporting innovation. He has a single mandate – to create the best environment for innovation in the world – and he has the authority to address the obstacles to making this a reality, and prevent new measures which would set it back. He is guardian and gatekeeper.

Fourthly, clusters. Israel is a small country, in size and population, with often no more than three degrees of separation. So clusters tend to form almost naturally. The military is a big part of life, and you often find people who served in the same military units then founding a start-up together. Beyond this, there is the connection between the academy and industry. Universities play a huge part in the innovation ecosystem, and do so enthusiastically. Researchers see potential commercial application as a vital partner in their work, not a distraction. Universities have in-house structures and specialists to help develop products and applications from research breakthroughs: they seek to value-add to their research before selling the IP out the door. Taken together, the close interaction between the military and industry and between the universities and the commercial world, and the characteristics of a small society, make for a high degree of collision and interaction. This is how ideas are formed, refined, improved and eventually commercialised. It’s like the whole country is a version of Silicon Valley. The government has taken steps to promote this – building a cyber hub in Beersheva, for instance.

What does all this mean for Australia? For me, the take-out is positive. Israel created a more innovative economy, and so can we.

Our baseline strengths to be a more innovative nation are good. We have strong research credentials and a highly-educated workforce. We have a sizeable and sophisticated capital market, supported by our large super funds. We embrace technology. Our population is still small enough to be manageable. We run a big migration program, meaning our country is also importing new talent and ideas. We too are a nation known for innovation and a healthy disregard for the usual way of doing things – disruption comes naturally to us. We are plugged into the growth markets of Asia, including through our network of recently-concluded FTAs and regional trade agreements.

Importantly, we have a high degree of political commitment and buy-in to now take the policy steps needed to realise our potential. Innovation has become a national priority, which means resources and political will can be mobilised behind it.

As we go about building a more innovative Australian economy, we need to ensure it remains uniquely Australian, and plays to our own natural strengths and advantages. We should not be seeking to replicate Israel or Silicon Valley or, indeed, anywhere else. ‘Cut and paste’ will not work. We will need to come up with our own policies and initiatives to foster more innovation.

But we can and should learn from the experiences of countries such as Israel, and adapt them to our own national circumstances.

Israel’s Chief Scientist, Avi Hasson, embarks on a one-week visit to Australia starting today (23 November 2015). He is visiting as a guest of the Department of Foreign Affairs and Trade, under the Special Visits Program.

Youth mental health, and what Israel has learnt from Australia

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Headspace: A New Australian/Israeli Start-Up

As we pass the first anniversary of the outbreak of last summer’s war with Gaza, people are quite properly remembering the suffering and pain that this war caused, in both Israel and Gaza.

Some of these scars are visible. Others, equally as painful, are hidden from the eye. We rightly remember the physical cost of this war. But the toll taken on mental health – and especially amongst young people – was equally high.

A few weeks back I attended the opening of the Headspace clinic in Bat Yam, the very first centre in Israel dedicated solely to treating youth mental health issues.

Any parent knows that the teenage and young adult years are some of the most difficult in a child’s life. It is a time of immense transition and challenge. Depression, anxiety, relationship breakdowns, bullying, military service, peer pressure, drug use, social isolation, self-image and sexuality – these are just some of the challenges faced.

Add to this the emotional toll of living in a state of war for over 50 days, and it is little wonder that youth mental health problems spiked in the aftermath of Operation Protective Edge.

Mental health issues are in fact the biggest health issue facing young people. One in four young people will experience a mental health problem by the age of 25. Suicide is the second most common cause of death amongst young people in Israel. Every day in Israel, on average, 17 Israelis attempt suicide. Hundreds more suicide attempts by teenagers go unreported.

These are sobering statistics, and they make a compelling case for improved mental health treatment for youth in Israel.

Headspace clinics were first established in Australia in 2006, with a view to improving the mental health of our youth population. The motto of Headspace is simple: “We help young people going through a tough time.”

There are now over one hundred Headspace centres operating around Australia, with more opening each year. The secret to the effectiveness of these centres is three-fold.

Firstly, mental health needs are just as acute and just as prevalent amongst youth populations as they are amongst the adult population.

Secondly, youth need their own treatment facilities for mental health. The stigma of mental health, insecurities, and family and societal pressures all mean that adult mental health facilities are not up to the task of dealing with young patients. A different environment and approach is needed – one that is friendly, accessible, private and non-judgemental.

Thirdly, early identification and treatment of mental health issues is essential. If options for early treatment are not available, mistakes and decisions are often made which have long-term and damaging consequences. The impact on the lives of those involved, their families, and society at large, can be immense, and stretch for decades. And the costs to the public health system are orders of magnitude larger.

In six short months only, Headspace Bat Yam has learnt these lessons and more. It has conducted over three hundred consultations and treated over two hundred patients. It has tapped a previously unmet and unmeasured demand for youth mental health services in Israel. And its early intervention model promises better lives and better public health outcomes.

Australia has been a proud supporter of these efforts. Not only has Headspace Australia helped establish the model here in Israel, but many Australian Jewish families – the Pratt, Lowy, Gandel, Saunders and Smorgon families – have provided financial support to this Israeli pilot.

We have taken to heart the view that the best way to ensure the future success of Israel is to help invest in Israel’s youth.

Headspace is a genuine example of an Australian/Israeli Start-Up – disruptive, innovative, consumer-driven, results-oriented, and life-transformative.

#Diplomacy in the Digital Age

 

 

On 27 June I delivered the graduation speech for the Public Diplomacy major students at Hebrew Reali School in Haifa, one of Israel’s oldest and most well-regarded educational institutions. Below is what I had to say on the challenges of diplomacy in the digital era.

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I’ve been asked to talk to you this evening about some of the challenges facing the practice or profession of modern-day diplomacy.

In particular, the disruptive effect of modern communications, social and mass media, globalisation, and the 24-hour news cycle on what is surely one of the world’s oldest professions.

I think it would be uncontroversial to say that the role of a diplomat has changed vastly in the past one hundred years.

Partly, these changes are the result of the same advances in technology and communications that have disrupted so many professions.

Partly, they are the result of the changing nature of the body politic, and of the growth in public accountability of governments.

But I am not sure if people in my profession – of diplomacy – have really thought through what all these changes mean for how we do our work.

Diplomacy in years past was a largely closed profession, which enjoyed significant monopolies.

Your archetypal ambassador back then was usually drawn from the aristocratic classes or the elite.

He – and it was always a he – served several key functions.

In his country of residence, he was the main reporter and interpreter of events and their significance to his home country.

He was the primary means of communication between his home state and his state of residence.

In his country of residence, he was the sole representative of his country, authorised to speak and negotiate on his country’s behalf.

If any of you are familiar with Hilary Mantel’s novels about Tudor England, Wolf Hall and Bring Up the Bodies, or if you have watched the BBC television mini-series showing here in Israel, then Chapuys – the envoy of Charles V, the Holy Roman Emperor, to England during the reign of Henry VIII – is the archetypal example.

Such an ambassador enjoyed an effective monopoly in each of these three domains – information, communication, and representation.

Let’s take Chapuys as an example.

There was no global media, so Henry VIII’s marital turmoil and his fractious relations with the Pope could not be read about in the tabloid press.

Charles V would hear all this intrigue primarily from his ambassador in England, Chapuys.

If you were the King of England and wanted to pass a message to Charles V, to test his interest in renewing your alliance after you had divorced his aunt, Catherine of Aragon, you could not just telephone him.

You certainly couldn’t direct message him on Twitter or WhatsApp him. Or write on his Facebook wall.

Instead, you would convey your message through Chapuys.

At the same time, direct relationships between rulers and their court officials with counterparts in other countries were almost non-existent. Capital-to-capital and leader-to-leader diplomacy was exceedingly rare, simply because rulers didn’t usually leave their kingdoms.

So when Charles V responds positively to Henry’s overture, through his ambassador Chapuys, how does Henry go about negotiating the terms of this new alliance?

You do not up and move your entire court and go and visit Ghent or Vienna or wherever Charles V happened to be residing at the time.

You might – just might – send over a trusted adviser to make the hazardous voyage. But more than likely you would negotiate directly the terms of a new alliance with the ambassador in country, Chapuys.

Chapuys would have some sort of basic instructions from the Emperor about bottom lines, but within these parameters he would be free to negotiate as best he saw fit. There was no checking in with Ghent overnight.

In the modern-day world, as an ambassador, all this has changed.

Let me use myself as an example here.

As ambassador, I no longer enjoy a monopoly on information.

Leaders and decision-makers back in Canberra know what is going on in Israel.

They can read Haaretz or the Jerusalem Post or YNet online. If it’s a big story, they will see the headline scroll by on the ticker tape of the 24-hour news service they have continuously playing on their television, or read it in their Twitter feed.

Sometimes, if events happen overnight, they know before I do.

I still get those moments of cold panic when my phone rings in the middle of the night and the number is an Australian one.

The fear is they are going to ask me about something that has just happened in Israel about which – because I’ve been asleep – I know absolutely nothing, and will have to somehow bluff my way through.

They also don’t need me to analyse developments. They can read papers from thinktanks or universities, or read the columnists in the quality global media.

People from Australia – business people, politicians, journalists, Jewish community leaders – travel to and from Israel all the time, and the political class back in Canberra will often call on them – not me – for an understanding and assessment of what is going on here in Israel.

I also no longer enjoy a monopoly on communication.

If Prime Minister Abbott wants to talk to Prime Minister Netanyahu, he will likely just ring him directly. If my Foreign Minister wants to talk to Israel’s Foreign Minister, she might just text to set up a call.

If I’m lucky, I’ll hear about the calls. If I’m good at my job, I’ll find out what was discussed.

But the point is, I’m not needed. I’m dispensable.

Leaders do not need me to facilitate their communications with one another. Nor do large numbers of government officials, who have direct relationships and lines of communication with their counterparts in other capitals.

Lastly, I no longer enjoy a monopoly on representation.

In my credentials letter, which I presented to President Peres in a ceremony in August 2013, I am described as ‘Ambassador Extraordinary and Plenipotentiary’.

This means that – technically – I am vested with the full powers to represent the Government of Australia here in Israel.

I can sign and negotiate treaties. I can propose new areas for cooperation. I can declare Australia’s policy on controversial issues, such as the BDS campaign, or Israel’s conduct of the Gaza war last summer.

In Chapuys’ time, this would have given me some real latitude for action. Communication with your capital was slow and difficult. Ambassadors and delegations were expected to improvise and make decisions about policy within a wide area of discretion.

But today, everything, or nearly everything, is checked with your capital first, and policy is made at home, not abroad.

Modern communications mean you can get revised instructions on how to handle an issue instantaneously or overnight. On sensitive issues, it is career suicide not to do otherwise.

And usually, on the bigger issues, it is your political leaders who are the spokespeople. All the ambassador does is transmit the message to the in-country audience.

Nor am I the only diplomat at work on this relationship.

Political leaders, defence forces, intelligence agencies, ministries of finance, civil society and community groups – all these frequently have direct relations and interactions with their counterparts in other countries.

To sum it all up, the diplomatic service no longer enjoys exclusive rights when it comes to diplomacy.

My job is vastly different to that of Chapuys. Even compared to an ambassador of one hundred years ago, my role and powers are more limited.

I no longer enjoy the natural monopolies on information, communication, and representation enjoyed by my professional ancestors.

Technology has disrupted the profession of diplomacy.

Natural monopolies have been destroyed.

Margins of advantage have been eroded.

Diplomacy these days is a much more contested and competitive space.

On top of these changes, wrought largely by technology, I would also single out another driver of change.

And that is the increasingly democratic and pluralistic nature of the nations in which we live.

In days past, the ambassador was the personal representative of the sovereign. Often the ambassador was drawn from the ruling family, or was minor nobility or aristocracy.

Today, ambassadors are still appointed by the sovereign. I was appointed by the Governor-General, for instance, the representative in Australia of Her Majesty Queen Elizabeth II.

Yes – Australia is still a monarchy.

But the notion that you are only the representative of the sovereign is today an illusion.

Today, an ambassador is expected to represent his or her nation in the broadest sense – its rulers, its people, its society, its values, its diversity. Even, at times, its divisions and debates.

Diplomacy is a much more accountable profession – to both your home government and your home public.

And today people expect their ambassadors to be drawn from all strata and facets of society, not just an elite minority.

The other change caused by the increasingly democratic and pluralistic nature of our countries is this.

The nature of the job – of who it is you are trying to persuade and influence – has changed.

In the days of Chapuys, his efforts would have been focused on the royal court of Henry VIII.

The king himself, the senior nobility, royals and clergy around him, his close advisers and office-holders, possibly his romantic interests.

It was a narrow target audience.

But today this target audience is much broader, especially in democratic countries with a free and lively political debate.

It is not just concentrated on a single person and the establishment around him or her.

An ambassador today still seeks to influence the people at the apex of power and decision-making in a country.

But power today in democratic countries is dispersed.

It spans numerous arms of government and spreads across the political and bureaucratic class.

It extends into the business and commercial realm. It includes the media, influential opinion-makers, academics, thinktanks, religious figures, political movements, NGOs, and minority groups.

This is your target audience as a diplomat. To be a good diplomat today, you cannot just restrict yourself to speaking to your host government.

You need to be speaking to everyone – the public, the media, activists, opinion-makers, NGOs, minority groups, business people, and people representing views right across the political spectrum.

Just as importantly, you need to be talking to the people who disagree with you. And you need to be trying to persuade them.

I am amazed at how many diplomats still seem to think that their primary contacts should be at the Ministry of Foreign Affairs and other diplomats.

Sure, these are important people to know. But your networks have to be much broader than that.

As I tell every new arrival in my Embassy, you are here to get to know and understand Israelis, not other foreigners.

And, because you are seeking to inform and influence people who are guided by political considerations, your role cannot be limited to speaking only to them in terms of your own country’s national interests.

Part of your role has to be to shape the political debate within the country, appeal to political instincts, and – perhaps most controversially – at times build or at least foster and promote political coalitions and debates which suit your own country’s interests.

At times, this brushes up quite closely against one of those hallowed principles governing the interaction between states, and that is the principle of non-interference in internal affairs.

But it is an essential part of the modern role of diplomacy.

For all this, you need to have an active public profile and presence. And you need to be engaged in topical debates. A willingness to do media, plus use of social media platforms like Twitter and Facebook, are immensely important in this regard.

This is a deeply uncomfortable position for many diplomats, especially those of an older era, who are more used to operating in the shadows and behind closed doors, and who tend to shun publicity.

I think it’s one reason why politicians are increasingly being used and seen as effective diplomats – because the skill-set you need as a modern diplomat overlaps in many respects with that of a good politician.

So, putting all this together, the role of diplomats today is more contested and more challenging – or at least so I would argue – than it has ever been.

Technological advance and the changing nature of government and society have thoroughly disrupted the old model of diplomacy.

This is not by way of complaint. In many ways, it represents an improvement.

The fact that an ambassador is no longer indispensable means more effort is spent in identifying and delivering genuine value.

If you’ve read any of the history about the lead-up to the outbreak of World War One, you’ll know that diplomats back then spent much of their time cutting out newspaper articles and editorials and mailing them back to their home countries.

There is not a lot of value-add in such an effort today.

And the fact that ambassadors today are expected to represent and be drawn from the full spectrum of the country they represent is undoubtedly an advance for equality. This is also a good thing.

But what all this change does mean is that you need to think quite carefully about what purpose and value a diplomat can still serve today, and to define and embrace the role accordingly.

Today, when I think of my own role, I tend to do so in the following terms.

I am one part lobbyist, one part thinktank, and one part spokesperson.

Let me break that down.

As a lobbyist, I should have an excellent set of networks and relationships across-the-board; understand the dynamics of issues; know how, where and why decisions are made; and be in a position to influence those decisions and actions where necessary on behalf of my client – the government and people of Australia.

This sounds a little tawdry when I put it like that, but it is basically what it boils down to.

As I mentioned before, I no longer have a monopoly over representation, and I’m really just one option amongst many for my country to use to represent its views to a foreign country.

So the distinctive value of my role comes from the in-country networks and knowledge that only living in a country can bring, and which ensures that these views have the best chance of being heard and acted upon – what some people call the “last three feet” of diplomacy.

This is as true whether I am attempting to help an Australian citizen in trouble or trying to encourage the development of regulations in the oil and gas sector so they are attractive to foreign investors.

As a thinktank, I am not meant to be a news or wires service for my country.

When it comes to reporting news, a diplomat cannot compete with the media – this is the loss of monopoly over information, which I mentioned earlier.

Instead, the value comes from providing some explanation, judgement and interpretation for your country around events, tailored to your own country’s views and interests.

Part of your role here is helping to filter and identify the significant from what is a continuous and otherwise overwhelming news stream.

Finally, as a spokesperson, I’m no longer the sole official voice of Australia here in Israel – this is the loss of monopoly over communication I spoke of earlier.

Where I can add value though, is in helping to tailor a message to a local audience, finding a way to explain our views or position in a way which resonates and makes sense, and identifying the best channels and outlets to use to push our message.

Where I can also add value is in being a vigilant guardian of my country’s message and reputation within country.

With the 24-hour news cycle, this means being quick to respond to questions or queries and ensuring that false assertions are countered or contested as quickly as possible.

A quick response is at a premium here, but the compressed timeline is something that foreign ministries, as large and bureaucratic organisations, naturally struggle with.

I’ve spoken tonight about the challenges of how you conduct modern day diplomacy.

I hope I’ve managed to convince you that diplomats still have a role to play in today’s world.

I think at the least, in being forced to write this speech, I have managed to convince myself.

And I would say – perhaps because of the challenges you face, perhaps because of your innovative and adaptive character – Israel produces some of the best diplomats in the world.

What I have not mentioned tonight though is the subject matter of modern day diplomacy – that is, what are the challenges that modern day diplomacy is and should be addressing.

This is a much harder topic.

It goes to the heart of what sort of world we will be living in within the next generation, and the concept of global order.

It has become a little commonplace to say that the current global order, the rules-based international system enshrined in the post World War 2 settlement, is under threat. But I genuinely think it is.

In many respects, we seem to be heading for a late 19th century or early 20th century world.

A world of rising, dominant and declining states, jostling for influence and respect.

A world that is largely free from ideological contest but less constrained by norms and rules.

With the key difference being that we now live in a single international system in many respects – for the first time in history – where disorder and threats in one part of the system are readily transmissible to other parts.

These are topics you will all wrestle with as you leave school and embark on your professional lives.

In one capacity or another, you will all be serving as ambassadors for your country.

In that endeavour, I wish you all the success in the world.

Israel: Don’t let your gas languish underground

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Watching the debate unfold in Israel about how to manage an emerging offshore oil gas industry, I’ve been reminded of similar debates in Australia.

Today Australia is a major energy exporter. We are the world’s 4th largest exporter of liquefied natural gas (LNG) and are on track to become the world’s largest producer of natural gas by 2020.

But as we found, building a world-class gas industry is a challenging task.

In many ways, the discovery of the resource – the stage Israel is still at with the Leviathan field – is actually the easiest part.

Many countries throughout the world have extensive natural resources. Very few have successful and well-managed resource industries.

The difference usually comes down to policy and governance.

The discussions underway in Israel about how to build a competitive gas industry are healthy and understandable.

How do you ensure the citizens, the ultimate owners of the resource, benefit from it?

How do you ensure competition in a sector where big players tend to dominate?

How do you protect the environment, create jobs and ensure worker safety?

Over a matter of such great public interest, these are all legitimate debates to have. We had them ourselves in Australia a few decades ago. They involve difficult choices.

At the end of the day, it is about finding an appropriate balance between a range of competing interests and priorities.

Did we get everything right in Australia? Absolutely not.

But we managed to create a world-class LNG industry which has created jobs and prosperity, enjoys broad public support, and is well-managed and regulated.

We learnt several lessons from our experience, which are just as relevant for Israel as they were for Australia.

First, foreign investment is a critical partner. The significant capital and risk involved in a big natural resource project means it is usually beyond the scope of a small domestic market to finance. The right foreign investor can also bring relevant technical expertise and access to markets.

Second, foreign investors are ruled by commercial considerations. They are not philanthropists or Zionists. The only reason they will get involved in a project is if they think they can make a decent, risk-adjusted return on capital.

Third, a certain and stable regulatory environment is essential. Given the size of the capital investment required and the decades-long life of these projects, investors need to know the rules of the game in advance – certainty – and be confident that these rules will not be changed arbitrarily over the life of the project – stability.

Fourth, the oil and gas sector is a highly competitive one. New gas field discoveries are made all the time. You have to create an attractive package to lure investors, or they will go elsewhere.

I was very disappointed when Woodside terminated its interest in Leviathan in 2014, because it is exactly the sort of major outside investor needed to help Israel’s fledgling gas sector realise its full potential.

Since that time, the headlines coming out of Israel’s oil and gas sector have not been reassuring, with several developments creating new sources of uncertainty.

Coupled with falling global gas prices, this has further hurt confidence in the sector.

If an oil and gas sector gets off the ground in Israel, it would be an immense strategic asset for the country.

It would create new sources of economic growth, increase government revenue (which could be used for social spending), diversify the economy and lessen Israel’s reliance on the high-tech sector, and even help Israel’s relationships with its neighbours.

But if things continue as they are, I fear the resources may remain under ground and under utilised. This would truly constitute a missed opportunity.