By Calvin Stead
Australia just announced an enormous increase in defence spending when the country is already facing decades of debt. Here’s why this is a good thing.
On 1 July 2020 the Prime Minister and the Minister for Defence announced that over the next 10 years, Australia will invest $270 billion to upgrade the capability and potency of the Australian Defence Force[1]. This announcement comes at a time when Australia is still weathering the economic shocks of the COVID-19 pandemic, with some forecasts predicting that if current economic settings are maintained, Australia will not reach a net zero debt threshold until FY2056-57[2]. With that in mind, why has the Government committed to this spending endeavour, and why has the Federal Opposition come out in support of it?
The answer lies in the strategic realities of the Indo-Pacific region. Australia can no longer assume that the US will remain the hegemonic power in the Indo-Pacific. Despite the Obama administration’s 2012 ‘pivot’ to Asia, China’s regional power has continued to grow, and assertions of regional economic and territorial dominance have become commonplace. Parallel to this are the growing fractures within the US domestic political establishment that threaten to draw Washington away from foreign policy commitments in the Indo-Pacific. Australia is caught in a complex position; for decades the US has been its closest strategic ally, however it is also inextricably economically reliant upon China. Faced with this, Australia must move to adopt a new approach to its defence posture in the region.
Despite the 1 July announcement, Australian regional security will still be largely dependent on the US continuing to view the Indo-Pacific region as a foreign policy priority for force projection for years to come. Corollary to this is the fact that as the domestic political climate within the US shifts, so too does its approach to foreign policy[3]. As the President sets the direction of US foreign policy, every 4 years there may be a seismic shift in the way the US conducts itself around the globe; Australia’s historic reliance on the US for regional security has made this a vulnerability. The current Trump administration has been criticized for taking a haphazard approach to foreign policy informed more by populism than strategic advice[4], a stark contrast from previous administrations. While this unpredictability may not be the norm of US foreign policy, it does highlight the vulnerabilities Australia faces by relying on a leader that we have no democratic influence over. Similarly, domestic political influences within the US will shape how foreign policy is developed; in 2020 alone, the US has been hard-hit by the COVID-19 outbreak, deteriorating race relations, and widespread public unrest[5]. These pressures have the ability to draw US attention inwards and away from foreign policy. While Australia is currently enjoying the security benefits of the strategic focus now, there is no guarantee that the US will continue to see the region as indefinitely strategically important. As such, Australia needs to embrace policy options that diversify the sources of our regional security away from single actors such as the US.
Since President Xi’s rise to power in 2012, China has not shied away from asserting its newfound power, both hard and soft, throughout the Indo-Pacific. In 2015 it was reported that China was aggressively pursuing land reclamation and the development of military installations on multiple reefs in the disputed territories of the South China Sea, the Paracel and Spratly Islands, an act that former Prime Minister Malcolm Turnbull described as “pushing the envelope”[6]. This assertion of territorial dominance has opportunistically continued while the world was wrestling with the COVID-19 pandemic; in April 2020 China declared two new administrative districts across areas within the Spratly and Paracel islands[7]. In addition to territorial dominance, since 2013 China has also sought to assert economic and diplomatic dominance across the world through the Belt and Road Initiative (BRI), an international investment mechanism estimated by some to be valued anywhere between US$1 trillion to US$8 trillion[8]. There is growing concern within the international security community of the long-term security and sovereignty impacts of signing on to the BRI, especially for developing states who appear to lack the financial capability to repay these loans - yet sign on regardless[9]. This predatory economic strategy is not limited to the BRI.
Australia’s continued economic growth is dependent on Chinese trade. Accounting for over a quarter of Australia’s two-way trade, and nearly a third of Australia’s export market, China’s control over the Australian economy is substantial[10] – and China has not been reluctant to remind Australian policy makers of this. In the context of Australian policy decisions unpopular with Beijing, whether it related to the banning of ZTE and Huawei from the operation of the Australian 5G network, or the passage of foreign interference transparency legislation, China has been willing to pull economic levers in response; briefly banning coal imports in February 2019[11], applying anti-dumping tariffs on Australian barley in May 2020[12], and more recently warning Chinese tourists and students not to travel to Australia - threatening industries worth billions to Australia’s GDP. Australia’s economic reliance on an assertive China presents a serious security and sovereignty risk.
The 1 July announcement is an extremely positive step in the right direction to address these strategic vulnerabilities, and the Government should be congratulated for it. With $75 billion alone allocated for maritime capability investment, Australia will be well placed to engage in force projection throughout the Indo-Pacific in years to come. However, it is important for policymakers to remember that an investment in traditional defence capability is strategically worthless if the nation still possesses other security vulnerabilities in the economic and cyber spheres. Policy development must be guided by a national security grand strategy that looks well into the future, proactively identifying potential threats and vulnerabilities.
Image credit: https://www.canberratimes.com.au/story/6820658/government-should-focus-less-on-war-preparation-and-more-on-war-prevention/#gsc.tab=0
[1] https://www.pm.gov.au/media/defending-australia-and-its-interests
[2] https://www.pwc.com.au/press-room/2020/comprehensive-tax-reform-timing-is-everything.html
[3] Milner, H. V. & Tingley, D. H., 2015. Sailing the Water’s Edge: The Domestic Politics of American Foreign Policy. 1st Edition ed. Princeton: Princeton University Press, pp. 262-263
[4] Drezner, D. W., 2019. Present at the Destruction: The Trump Administration and the Foreign Policy Bureaucracy. The Journal of Politics, 81(2), pp. 723-730.
[5] https://foreignpolicy.com/2020/06/18/america-broken-trump-racism-protests-united-nations/
[6] https://www.abc.net.au/news/2015-09-22/south-china-sea-islands-before-and-after/6794076?nw=0
[7] https://foreignpolicy.com/2020/05/14/south-china-sea-dispute-accelerated-by-coronavirus/
[8] https://www.csis.org/analysis/how-big-chinas-belt-and-road
[9] Ahmed, S., Bing, W., Burimaso, A. & Githaiga, N., 2019. The belt and road initiative: Opportunities and risks for Africa's connectivity. China Quarterly of International Strategic Studies, 5(1), pp. 117-141.
[10] https://www.dfat.gov.au/sites/default/files/australias-goods-services-by-top-15-partners-2018-19.pdf
[11] https://www.smh.com.au/world/asia/a-big-chinese-port-bans-australian-coal-and-the-dollar-falls-20190221-p50zfu.html
[12] https://www.smh.com.au/politics/federal/china-relations-sour-over-tariff-threat-to-australian-barley-20200510-p54rjc.html