TIME: What kind of New Zealand did you inherit?
Clark: I think it would best be described as a somewhat disappointed nation, somewhat cynical. This was a country which had been promised that going down a certain path would deliver a lot economically and to the benefit of ordinary people. Years down the track, people felt worse off. They felt that whoever they elected, they got governments that did things they hated. I think they were looking for a real change. They were looking for people who put human values to the fore again, not always being obsessed with the bottom line. Economic rationalism had run its course. A lot of the people who voted for us would share my assessment that economically what had happened was a failure, that society was fragmenting, and a lot of individuals fell through the cracks.
TIME: How will your government go about restructuring the country?
Clark: We're a fairly deliberate sort of government. We've set modest objectives that are achievable. They're not flipping the society back to pre-1984, but they're about moving forward in ways more familiar in Europe under social democratic governments. The sort of changes you'd like to see you can't achieve in three years.
TIME: How are you finding the operation of the coalition?
Clark: It's exceeded my wildest expectations. One of the worst fears that people developed with mmp [the mixed member proportional electoral system, introduced in 1996, in which voters cast two ballots, for a party and a local M.P.] was that their governments would always be in chaos and fighting. If the public seriously thought we could return to the situation where a single-party government had absolute power between elections, I think you'd find support for mmp would shoot right up again. That's because mmp was a reaction to an untrammeled single-party government abusing its power.
TIME: How would you characterize your style of leadership?
Clark: Direct, open, blunt, a lot of contact with media. You get accused of being the Minister of Everything, but I think most journalists would admit that the reason I offer opinions on things is because they ring and ask, and I do have a fundamental belief that the buck stops at the top and that people are entitled to know what the Prime Minister thinks.
TIME: Is there a leadership role for New Zealand in this region?
Clark: In terms of having views and being prepared to express them, yes, I think New Zealand's had a leadership role in a lot of things. Nuclear disarmament, obviously. The last nine years were a bit of a dark spot, but if you go back to the previous era, when Geoffrey Palmer was Minister for the Environment, he did a lot of good work on the Law of the Sea and environmental issues. New Zealand's been pretty quiet on human rights issues, which we will be taking rather more interest in, and in international labor issues. New Zealand, for its size, does quite well in terms of leadership on issues.
TIME: Has the country had to pay a price for its loyalty to some of those issues?
Clark: No. I don't accept there's been a cost at all. What has been the cost?
TIME: Perhaps not such a terrific relationship with Washington?
Clark: The relationship's fine. We were told that we are a friend, not an ally, and we're good friends.
TIME: What about the restructuring of the armed services, especially in terms of allies?
Clark: Best described as a work in progress, in terms of what's going on with defense policy here. One of the early decisions we had to take was on the purchase of the F-16s. We went into it saying, "If purchasing these planes was a higher defense priority, then the Americans offered us a very good deal. Unfortunately we can't see the purchase as a high priority." So that was the honest position and they accepted that New Zealand would set its own defense priorities.
TIME: Given that it's probably felt strongly -if privately-in Canberra that New Zealand continues not to pull its weight on defense, how can you be so confident that there isn't some kind of diplomatic or political cost, particularly in that relationship?
Clark: I'd like to see the costs spelled out. You see, I have very little time for that kind of commentary. New Zealand has not only pulled its weight, it's over-pulled its weight in conflicts throughout the last century and before, so you won't find any sympathy in New Zealand for those sorts of jibes from across the Tasman. In fact, you'll find a considerable amount of resentment. In the end, there will always be a fundamental difference of perspective between New Zealand and Australia on defense, whoever is in government. It has to be borne in mind that the last New Zealand government actually cut defense spending by about 30%. One of the problems we face is that it's taken so much money out that you really can't put it back in without reprioritizing defense to the very top of your spending priorities, which would be ridiculous, given the benign environment that we're living in. So, you've got Australia- which is a medium-sized power-looking west to the Indian Ocean and north into Southeast Asia. You've got New Zealand-which has no power at all-looking west across the Tasman and north into the Pacific. It's just a different strategic situation, and that's why we don't accept the notion of a single strategic entity. Where you stand depends on where you sit.
TIME: When you look to the north, though, and see the instability that seems to be creeping into South Pacific countries, does your assessment of that environment seem less benign?
Clark: No, because it doesn't threaten the security of New Zealand. It is a concern in the sense that it is a blemish on the good name of the South Pacific, which is why we're looking now at how we might proactively design a strategy for New Zealand in the South Pacific, which there's never been.
TIME: We saw some scenes of Maori activists visiting Fiji, saying, "If we had the same sort of numbers we'd be doing the same sort of things in New Zealand."
Clark: Those individuals would, yes. I don't think it will have a trigger effect here. There are small groups in New Zealand like those who went to Fiji who think that way, but I wouldn't think that view has traction.
TIME: Not now, but what about in 20 years?
Clark: That's entirely a matter of how we conduct our society. It's one of the greatest challenges we face, not to have indigenous people and Pacific migrants as permanently dispossessed minorities with a huge sense of grievance.
TIME: Tell us about your "closing the gaps" strategy.
Clark: It's about a more cohesive society in the future. I think that across social groups, there's a high level of appreciation that we can't let New Zealand become a ghetto of disadvantage, and that there is an obligation on us to address opportunity for Maori and Pacific peoples. We haven't got the cash to go around increasing benefits. We're emphasizing opportunity through education, employment, and we're building the capacity of organizations in these communities to define needs and to meet them.
TIME: How is your relationship with the business community?
Clark: There are ideologues and there are pragmatists. Some people are so rich they can spend the next 212 years in a war of attrition against the government. There are others who would quite like to get on with making their business function, and we do deal with them.
TIME: Is business confidence a delicate flower that needs nurturing?
Clark: Business can talk itself into a blue funk. It's starting to talk itself out of it now because it was so ridiculous. There wasn't anything other than a political beat-up to justify the blue funk. The forecasts for growth are fine. Of course they could always be better, but they're actually not bad at all. Booming export sector, booming tourism sector, booming IT sector.
TIME: Do you get a sense that you are in competition for global funds, and for multinationals seeking concessions such as are available in Australian states?
Clark: Yes, but at least we're in the game now. We weren't in it before. New Zealand has stood by while Australia's poached its businesses. Now there's a bit more aggressive recruitment going on, and you're starting to see some reverse flow, too-even without incentives. New Zealand is at something of a disadvantage because of its size. Our biggest companies don't rate on a radar screen internationally, so you have to create an interest in New Zealand that wouldn't be there on the basis of its size and importance. That's why I think publicity and promotions-you do it around an event like the America's Cup. That's so important, because people who would never have any other reason to come to New Zealand take an interest, and actually like it. You get people who have a lot of money to throw around with an interest which can be stimulatory. But a small country in a globalized economy has to work very hard to be noticed.
TIME: Will it be to New Zealand's advantage if a place like Sydney becomes more of a financial center and sucks in more money and people and interest internationally?
Clark: No. We want more of it here. We don't want to be just the branch economy. The challenge for us is to work out what our niche is, what are the kinds of companies that can grow big and still want to be in New Zealand. The reality is that they are going to be run by people who, for life-style reasons, want to be here, stay here, bring their families up, or come back here. Or they are going to be companies connected with the primary production base and added value, biotechnology, who have a reason to stay because the raw material is here. But we've had the experience, as have other small countries, of companies getting too big for home and heading off.
TIME: How confident are you-with the Greens as a coalition partner, and in a party with strong environmental instincts of its own-about picking your way through the biotech issues?
Clark: I think it's very important that we don't get scared off using the term biotechnology, because genetic modification is a small subset of that area. Biotechnology clearly has a major part to play in the future of New Zealand industries, so we can't be scared of it. Science is part of the future.
TIME: On national identity, it is sometimes said across the Tasman that New Zealand should be another state of Australia.
Clark: It won't happen. The two societies are very closely linked-we've got virtually free trade, a common labor market. But statehood, no.
TIME: What about the question of a New Zealand republic?
Clark: You know, the monarchy doesn't have a lot of relevance here, but nor is there a lot of energy to do anything about it. There's considerably more energy to do something about it in Australia. I think when Australia gets a new government, which probably isn't that far away, it will get a republic. That will increase the level of interest in New Zealand. I asked the Canadian Prime Minister if there was any pressure for Canada to become a republic. He said "Not at the moment, but if Australia does it, and then New Zealand does it, it'll become an issue for us." It will happen in my lifetime, but I intend to live for a long time.
TIME: If poorly handled, what capacity does the republic debate have to worsen race relations, since the Treaty seems to be a part of any constitutional discussion in New Zealand?
Clark: Well, that's the obstacle. You can't move forward till you've resolved certain issues about the Treaty. So that's something we're looking at-how we define the role of the Treaty in New Zealand law. Until we sort out some of those issues, the issue of a republic is not going to get a look-in, and if you dealt with it in a cavalier fashion, you would get a tremendous backlash from Maori, and rightly so. What they've got at the moment is the best on offer: a treaty between the Crown and the hapu of Maoridom. If the Crown disappears, what's the deal? So that's the debate. Australia doesn't face these issues, because it doesn't have a treaty with its indigenous people.
TIME: How much of a problem is it that there is currently an exodus-net migration out of New Zealand?
Clark: Look, it comes and goes, and ever since the tail end of the Asian crisis flicked New Zealand in mid-'98, it's been net outflow. It will only stop when people see there's more of a future here.
TIME: As an optimist about the country, what is your message to the people who are leaving?
Clark: The message is that the life-style is without parallel, and that in a globalized age of information technology, you can be entrepreneurial anywhere in the world and do well. There's no reason you can't be a leading software writer, a leading product designer, from New Zealand-and many are-but we've got to get that image across to ourselves, build that confidence in ourselves that these things can be done from New Zealand. By all means, go out and try the world. It's exciting, it's interesting, but actually, there's a lot going for New Zealand, too.
TIME: Is New Zealand a country that has difficulty with self-confidence?
Clark:We've got a very strong literary tradition, and perhaps that's because New Zealand is a country that's searching for its soul. We do analyze ourselves to death. Maybe we're trying to work through our relationship between Maori and those who came after. There's no agreement that this is a multicultural society. There's a bicultural foundation and people are trying to work out how everyone who came later fits into that. We're a nation in search of an identity, but it's quite exciting. I don't regard it as a problem. It's a challenge.