Australia’s quasi-alliance with Japan becomes less quasi and more alliance.

The Australia–Japan partnership now uses language sourced from the 70-year-old ANZUS treaty, as the shared alliance with the US is emphasised.

In Perth on 22 October, Japanese Prime Minister Fumio Kishida and Australian PM Anthony Albanese signed a joint declaration on security cooperation (JDSC).

Albanese said the ‘landmark declaration sends a strong signal to the region of our strategic alignment’. Kishida said the partnership had ‘risen to a new and higher level’, responding to ‘the increasingly harsh strategic environment’.

Quasi-alliance wording drafted by the previous Liberal–National government for this second iteration of the declaration—JDSC 2.0—becomes a Labor government achievement. In its first version 15 years ago, the alliance potential of JDSC 1.0 was a point of Labor–Liberal difference.

Today the quasi-alliance is part of Canberra’s strategic consensus.

In expressing the latest formal step, Australia sought ANZUS-treaty rhymes. Comparing key sentences from the two documents is illuminating.

ANZUS Article III: ‘The Parties will consult together whenever in the opinion of any of them the territorial integrity, political independence or security of any of the Parties is threatened in the Pacific.’

Article 6 of the new JDSC has this echo: ‘We will consult each other on contingencies that may affect our sovereignty and regional security interests, and consider measures in response.’

This is ‘new territory’ for Japan, which does not have such a security arrangement with any other country apart from the US, as the Australian Financial Review’s Michael Smith reports: ‘Sources in Tokyo close to the process say it was the former Morrison government that originally proposed the ANZUS-style provision, which would demonstrate a greater alignment of strategic intent to stand up to China.’

Savour the irony that ANZUS was a US treaty promise to Australia and New Zealand that they’d never again have to worry about Japan as a military power. Today’s worry is how much more power Japan can offer.

In the ANZUS treaty, the ‘consult’ provision is followed by an article declaring that if any party is attacked, each ‘would act to meet the common danger in accordance with its constitutional processes’.

The ‘no war’ article in Japan’s constitution is a political minefield, so the new declaration doesn’t go near that language. The quasi-alliance has to evolve as Japan broadens and reinterprets the meaning of ‘self-defence’.

The military basis for the new JDSC is the Japan–Australia Reciprocal Access Agreement, signed on 6 January by Kishida and Prime Minister Scott Morrison, covering reciprocal access and cooperation between Japan’s Self-Defense Forces and the Australian Defence Force.

Negotiations covering training, base access, logistics and security protocols began in 2014, ASPI senior fellow Thomas Wilkins noted, as Japan ventured beyond its exclusive reliance on the US as a military partner. The reciprocal access agreement is another piece in the jigsaw of what Wilkins calls ‘the second most important security relationship for both Canberra and Tokyo’.

The shift in Japan’s military posture has produced a more muscular version of the JDSC, prepared to talk about war as well as the problems of peace.

Article 7 of the new declaration grounds the approach to common danger in the trilateral and the Japan–Australia leg of the alliances with the US:

Our bilateral partnership also reinforces our respective alliances with the United States that serve as critical pillars for our security, as well as for peace and stability of the Indo-Pacific. Deepening trilateral cooperation with the United States is critical to enhancing our strategic alignment, policy coordination, interoperability and joint capability.

The Perth statement of JDSC 2.0 updates the original signed in Tokyo in March 2007 by Shinzo Abe and John Howard, affirming a ‘strategic partnership’. Back then, Labor leader Kevin Rudd said there should be no move beyond JDSC 1.0 towards a full defence pact with Japan, warning: ‘To do so at this stage may unnecessarily tie our security interests to the vicissitudes of an unknown security policy future in northeast Asia.’

The Labor caution about JDSC 1.0 at its creation was the same sentiment that helped sink Quad 1.0 when Labor won office in 2007. Back then, the Rudd government had high hopes for China and doubts about a strategic bet on Japan or India.

The quasi-alliance with Japan has grown for the same reason that the Quad was reborn in 2017. Quad 2.0 arrived, Rudd later commented, because Chinese President Xi Jinping had ‘fundamentally altered the landscape’ in the way he sought to project Chinese power. Strategic circumstances, he said, had ‘changed profoundly’.

Kishida’s reference to the ‘harsh strategic environment’ explains much about why he and Albanese have met four times since Labor won office in May: the Quad summit in Tokyo; the NATO summit in Madrid (attended by Australia, Japan, New Zealand and South Korea); the Tokyo funeral for Abe, where Albanese was accompanied by three previous Australian prime ministers (John Howard, Tony Abbott and Malcolm Turnbull); and the annual Australia–Japan summit in Perth.

Over the past decade, I’ve put a range of qualifiers around the idea of the strategic partnership with Japan as an alliance: ‘quasi-alliance’, ‘small “a” ally’ and ‘alliance lite’. The ‘quasi-alliance’ usage has had some currency in Japan since JDSC 1.0 in 2007.

Wilkins comments that ‘quasi-alliance’ and ‘semi-alliance’ are more characterisations than official policy. Rather than bearing ‘the consequences of announcing a formal military alliance or treaty,’ he notes, the phrase ‘strategic partnership’ serves as an effective proxy.

The 2.0 version revs up the proxy.

In taking the next alliance step, Japan and Australia have set an interesting timeline: the next 10 years. The new declaration says that ‘over the next ten years, Australia and Japan will work together more closely for our shared objectives’.

The timeline describes a dangerous decade, but also the time for further evolution of the JDSC.

The quasi-alliance can grow the strategic qualities and quantities Japan and Australia need.

Japanese Prime Minister Fumio Kishida visited Perth to meet with his Australian counterpart, Anthony Albanese, at the weekend. It was the pair’s fourth in-person meeting this year.

One of reasons for Kishida’s visit was reciprocating Albanese’s summit-level visits, as he had already flown to Japan twice since his election (for the Quad leaders’ summit in May and the recent state funeral of former prime minister Shinzo Abe).

Still, Kishida’s visit goes beyond diplomatic courtesy and has strategic implications for not only bilateral relations between Canberra and Tokyo, but also the broader security dynamic in the Indo-Pacific.

There were two primary issues that the two leaders discussed. One was energy supply from Australia to Japan. Japanese electricity prices have risen by 20–30% this year due to Russia’s invasion of Ukraine and the depreciation of the Japanese yen. Kishida made a promise to the Japanese people to reduce the burden of electricity bills in a speech earlier this month. Australia is the largest supplier of liquefied national gas and coal for Japan, accounting for 59% and 39% of its import of those commodities, respectively, and ensuring a continuous energy supply was an important political goal for Kishida.

The other major topic was increasing momentum for bilateral security cooperation. The two leaders agreed on a renewed and expanded security partnership for the first time in 15 years. The previous declaration, signed in 2007, focused more on non-traditional security issues such as terrorism and the proliferation of weapons of mass destruction, and human security concerns such as disaster relief and pandemics.

The new declaration clearly targets traditional security matters. As Japan’s ambassador to Australia Shingo Yamagami said in a recent interview, the security environment in the Indo-Pacific has changed dramatically since 2007. Based on shared concerns, the new declaration boosts intelligence sharing, especially on geopolitical challenges posed by China, and increases military cooperation based on the reciprocal access agreement signed in the beginning of this year.

The new declaration, which stands solidly on the two countries’ cumulative history of security cooperation, will set up higher ground for a so-called quasi-alliance between Australia and Japan, as well as for trilateral and quadrilateral cooperation. This well-crafted declaration will enrich the discussion over Japan’s recently released national security strategy and key defence documents that are slated to be revised by the end of this year.

However, whether the two countries can realise the aspirations of the new declaration will depend on how substantially the Kishida administration can change Japan’s defence policy. The immediate testament will be the amount of any increase in the Japanese defence budget. Kishida has been influenced by fiscal realists at home. One symbolic discussion is which items should be included in the defence budget; the government has said it will aim for the aspiration among NATO members to spend 2% of GDP on defence but has included the coastguard and research and development in that figure. Former vice defence minister Shimada Kazuhisa criticised the move as ‘using baking powder’ to make the budget look bigger than it was.

Australia spent more than double Japan’s spending in terms of per capita defence budget and defence budget per GDP, though Australia’s overall defence budget ($54 billion) is smaller than Japan’s ($82 billion). While Japan has increased its defence budget in the past 10 years, the percentage of the total national budget spent on defence has been consistently around 5% and even slightly declined from 5.4% in 2009 to 5.2% in 2021. This means that the Japanese government has never seriously prioritised increasing the defence budget over other items, but rather has continued to allocate a similar-sized slice of the whole cake despite the deteriorating security situation.

Japan’s to-do list is not just limited to its defence budget, however. Australia regards countering foreign interference in a whole-of-society way that includes universities, for example, while Japan still primarily focuses on economic aspects, such as sophisticated technologies and critical infrastructure. There’s no sign that the Kishida administration wants to ignite debate over a long-awaited anti-spy law, which significantly expands the space for intelligence cooperation between Japan and the Five Eyes countries of Australia, Canada, New Zealand, the UK and the US, or fundamentally change the concept of Japan’s ‘exclusively defence-oriented policy’ (senshu bouei). The only potential improvement under that policy was the possibility it would enable unrestricted strike capabilities for the Japan Self-Defence Forces, though that was later watered down to ‘counter-strike’ capabilities. These sorts of measures need political will more than they need funding.

In terms of military-related R&D, Australia is moving ahead under the AUKUS agreement with the UK and US, while many Japanese experts have warned of the danger of Japan’s domestic defence industries becoming extinct. Although Japan has loosened a self-restrictive export control on weapons and completed the first-ever major equipment transfer to the Philippines this month, most Japanese defence companies exclusively sell their products to the JSDF. Retired admiral Yoji Koda Yoji also points out the risk of simply seeking domestic procurements due to a lack of technological development and the potential availability of more suitable overseas options.

Whether Japan can fulfil its diplomatic promises to Australia and other countries rests on the success of domestic reforms. Currently, an experts’ council for ‘comprehensively considering defence as national power’ is examining how to substantially improve Japan’s defence capabilities. They are expected to come up with policy recommendations by next month. Japan’s international partners, including Australia, which has made a significant statement with the signing of the updated security declaration, should carefully watch what the Kishida administration actually implements.

What does it mean to win? Instinctively, this seems like a straightforward question that should have a correspondingly straightforward answer. But when it comes to developing a national edge or strategic advantage, concepts such as winning and losing may not be so easy to define. In Australia, which has experienced few national existential crises, there appears to be little understanding of, or consideration given to, all the nuanced contours of winning—how to achieve advantage, how to identify gains and, more profoundly, how these things inform an associated theory of victory.

As the strategic landscape changes, and as adversaries’ use of the grey zone threatens to compromise citizens, infrastructure and the cognitive domain, this complacency may be the nation’s undoing. How can Australia turn the strategic environment to its advantage if it doesn’t have the intellectual frameworks to understand what winning looks like?

Part of the problem is Australia’s insistence on situating itself in the middle-power paradigm. Certainly, Australia doesn’t possess all the tools necessary to secure the breadth of its stated strategic objectives. It might punch above its weight in a limited operational scenario, but developing the capacity to go it alone for an extended period and realise ‘victory’ is a different challenge altogether. This reflects the kind of Goldilocks predicament middle powers often find themselves in; they’re not large enough to be able to dominate others with the sheer force their own instruments of military and economic power, but not so small that they can be easily dominated by a major power. Australia has arguably let its middle-power status come to mean that it must think about how not to lose rather than what it means to win.

Australia may need to develop the knowledge and confidence to hold its own, in intellectual and strategic terms. Established theories of asymmetry and deterrence, which are based on great-power dynamics, do not map neatly onto Australia’s context. And Australia’s middle-power mode is different from that of other middle powers with interests in the region, such as South Korea, the UK and Vietnam. Australia’s specific characteristics, as they are expressed both internally and externally, are what determines its competitive standing and the dynamic space in which strategy is devised. But identifying the opportunities this affords requires rigorous agitation of what Brendan Sargeant has termed Australia’s ‘strategic imagination’.

It is not Australia’s middle-power status that’s important in how it conceptualises the strategic levers that are available. Rather, it is understanding the dynamic and relational nature of advantage and identifying how Australia can capitalise on its particular national circumstances to enhance its strategic presence.

And now could be the moment. With increasing strategic competition in the Indo-Pacific, Australia has, at least, recognised that it must re-evaluate its regional role and its strategic identity. The 2020 defence strategic update underscored the need for Australia to adapt to a challenging strategic environment, emphasising regional partners and the US alliance as key enablers. The recognised need to understand Australia’s position relative to others in the region, whether they be ally, potential adversary or invested third power, could be critical to creating a strategically advantageous security environment. But the strategic update fell short of articulating how to develop these relationships so that Australia can attain a winning position or strategic advantage. Certainly, it has become limiting to think of strategic advantage in strictly military terms. The proliferation of grey-zone threats may require a broader conceptualisation of the levers for strategic advantage than those mitigated by Australia’s current defence strategy.

Perhaps it’s time for Australia to reject the conventional conceptualisation of the middle-power paradigm and commit to the difficult task of self-creation and a tailormade theory of victory. Australia may need to reframe its strategic identity in terms of competition and cooperation and start to conceptualise its security policy much more broadly in terms of where strategic advantages can be achieved relative to others in the region. Australia may need to focus more on its national and societal propensity for strategic advantage (that is, its ability to translate underlying potential into beneficial outputs) than its overall potential, (that is, its raw capacity in terms of resources, population, territory and so on). But because strategic advantage is relational and dynamic, the real challenge could be to determine how the Australian conceptualisation of competition in the Indo-Pacific differs from, or aligns with, that of key allies and partners, and what unique levers Australia possesses.

Australia may need to critically assess its strategic traditions to develop a broader conceptualisation of how to secure the safety and wellbeing of the nation and position itself advantageously. As Sargeant argued, it may be time to ‘imagine ourselves into what we might be, but also what the world might be’ and to develop a distinctive, gainful and effective presence in the region.

In this moment of strategic disruption, Australia needs to do the intellectual hard yards or risk forgoing the ability to shape its national destiny. The field could be left open to those who are more determined and who have a greater dedication to self-determination.

Marine safety and sea transport are major concerns for the Pacific islands region. The island states have a high level of dependence on inter-island transport for the movement of both goods and people. All Pacific peoples benefit from their access to affordable, safe and reliable sea transport.

As Sam Bateman argued many years ago, maritime safety is a neglected aspect of maritime security. Taken as one nation with a total population of about 12 million, the Pacific Islands Forum countries (excluding Australia and New Zealand) have suffered the highest rate of ferry fatalities per capita of any countries globally. In the past 30 years there have been eight known fatal ferry accidents in five island countries, resulting in 613 fatalities. There have been many more involving smaller craft. These tragedies shouldn’t happen.

Many Pacific islands are recognised archipelagic states. They’re largely reliant on ‘sea highways’: many of their outer islands have few roads, no rail and very expensive aviation. Most of the island nations can’t afford safe, modern but expensive ferries.

Most domestic ferries in the Pacific are operated on minimal budgets by sometimes unscrupulous people, not government marine departments. The vessels are usually old, poorly maintained and badly modified. They’re not well equipped with safety and communications equipment. Generally, they’re not very safe.

Australia is a world leader in small ferry building. Our naval architects and shipbuilders lead the world in the design and construction of safe, comfortable, efficient and economical roll-on, roll-off passenger and cargo ferries and dedicated passenger vessels. We’re renowned for our ship repair and maintenance skills and maritime crew training expertise.

The latter is critical. While hardware, in the form of safe ferries, is very important, the vast majority of ferry accidents have human error as their root cause. High-quality training in operations and management is vital. Australia has several companies and educational institutions, such as the Australian Maritime College, capable of offering that training.

Australian-designed FastCat passenger, car and cargo ferries have revolutionised ferry safety, comfort and service in the Philippines. Similar, but slightly smaller and slower, vessels would be ideal for the Pacific. Harwood Marine is completing two very similar boats for ferry company SeaLink to operate around Moreton Bay in Queensland.

Australia has several excellent free-enterprise ferry operators that have safely and profitably managed significant fleets of ferries for many years. One or more of them could be contracted to establish and initially manage Pacific safe ferry services and train personnel to the highest international standards prior to passing established businesses to national government control. They could then be managed in a similar manner to successful Pacific islands airlines, such as Fiji Airways and Air Niugini.

An Australian program of donating safe ferries along with associated logistical support and maritime training would be a logical development of our Pacific Maritime Security Program, under which we’re donating 21 Guardian-class patrol boats to 12 Pacific island states and Timor-Leste.

A few years ago the New Zealand government handed over a new ferry to Tokelau to allow for easier travel between the territory’s atolls and Samoa. Another recent example of gifting a vessel to a Pacific island country was the donation by Japan of US$10 million to Tonga in September 2021 for the provision of a new tugboat for the Port of Nuku’alofa.

The costs of a safe ferry program wouldn’t be huge. If we included nine Pacific countries in the program, plus Timor-Leste, a donation of two 40-metre vehicle and passenger catamaran ferries, ideally suited to tropical conditions, to each country would total 20 ferries. The current price of such vessels is around $12 million each. So that’s a total of $240 million for 20 vessels.

Berthing and loading facilities would require simple, cheap concrete structures. Operator, mechanic and marine-ticket training could be provided economically. The total cost for infrastructure and training support for the ferry program would be around $26 million.

The total cost of $266 million for a Pacific safe ferries program could be spread over five years. Our island neighbours would receive a useful sea highway providing them with safe, efficient and reliable transport of people, goods, vehicles and liquids, including drinking water. The ferries would be particularly useful for disaster relief. As recommended in a recent ASPI report examining ANZUS and the Pacific islands region, a ‘program of developing and upgrading a system of ferries, wharves and navigation infrastructure would contribute significantly to meeting national security needs in responding to natural and human disasters across the region’s major archipelagic states’.

Our current aid programs to the Pacific aren’t always given the credit they deserve locally. They’re not always obvious or prominent. For a comparatively small investment in a safe ferries program, Australia would be rewarded with significant kudos and appreciation at a time when the region is increasing geopolitically contested.

Semiconductors are the single most important technology underpinning leading-edge industries. They’re essential for the proper functioning of everything from smartphones to nuclear submarines and from medical equipment to wireless communications.

Australia’s notable lack of participation in the global semiconductor ecosystem has put it at a geopolitical disadvantage. As a nation, with some niche exceptions, it’s almost entirely dependent on foreign-controlled microchip technology, making it increasingly vulnerable to global supply-chain shortages, shutdowns and disruptions. Such occurrences have become all too common, either because of events such as the Covid-19 pandemic or because of other governments’ attempts to weaponise supply chains for geopolitical reasons.

Having unfettered access to microchips is a matter of economic and national security, and, more generally, of Australia’s day-to-day wellbeing as a nation. In an increasingly digitised world, policymakers must treat semiconductors as a vital public good, almost on par with basic necessities such as food and water supplies and reliable electricity.

By some calculations, Taiwan manufactures 60% of the world’s semiconductors and 90% of the most advanced chips. That alone should focus our minds on how we might shore up our future supplies of this critical resource.

The best solution is for Australia to build its own semiconductor manufacturing capability in selected areas matched to its research and development strengths and key markets. To do otherwise will expose Australia to significant risk, severely constrain our growth as a technological nation and consign us to second-tier status.

Granted, it would be an enormous undertaking—as many well-informed observers including Chief Scientist Cathy Foley have stated. Indeed, we call it a ‘moonshot’ in a report we are releasing today through ASPI.

However, there is a viable pathway that includes pursuing public–private partnerships from an existing R&D foothold, embedding Australian enterprises in friendly and reliable value chains, attracting talent and investment, and leveraging our relationships with strategically aligned and technologically advanced partners. Our report sets out the global context and key elements towards a national semiconductor plan, in which a $1.5 billion government investment through a combination of grants, subsidies and tax offsets could mobilise $5 billion in manufacturing activity.

Other like-minded nations have recognised the urgency and are moving quickly.

The United States and the European Union have both introduced ‘CHIPS’ Acts this year, which deliver subsidies for semiconductor sectors and support for areas that depend on advanced chips, such as 5G wireless, artificial intelligence and quantum science. Japan, South Korea, India and China are all stepping up their efforts. There is a race on, and Australia needs to move decisively.

The fact is, we are no longer in a period of economic liberalism and unrestricted free trade. Rather, nations have found it necessary to adopt the practice of ‘managed trade’ with a pragmatic techno-nationalism. This has been driven by geopolitics, most obviously by China’s mercantilist approach, but also by factors such as the Covid-19 pandemic and climate change, which is encouraging shorter supply chains in efforts to decarbonise economies.

Australia has some important strengths: strong institutions, a network of universities and R&D bases, an enterprising business sector, and good friendships with other leading technological nations with whom we share strategic interests, such as the US, the UK, Japan and South Korea. We need to use deft tech diplomacy and get ourselves into global value chains that are made up of reliable, strategically aligned countries—so-called friend-shoring.

Australia already has an important R&D base upon which it can build its new capabilities, in the form of the Australian National Fabrication Facility (ANFF) network under the National Collaborative Research Infrastructure Scheme, which with a modest investment could become more commercially relevant and attract and anchor real commercial foundries.

The ANFF, with eight nodes across Australia, enables researchers to innovate and fabricate advanced products including semiconductors, but not currently at any scale beyond research. Doubling the cumulative investment in the ANFF with a further $400 million in catalyst funding would enable selective key nodes to escalate from one-off R&D to develop pilot production lines geared to volume and yield, closing the gap to producing chips commercially.

They could then create a pipeline of talent and form commercial partnerships. Companies that see this activity are more likely to invest in Australia because they can locate a foundry close to one of these key nodes, rather than build from scratch. Several national and international examples are outlined in our ASPI report.

Significant subsidies and tax concessions would attract semiconductor firms to invest here as part of public–private partnerships. The arrangements set out in the US CHIPS and FABS Acts are a good guide and could be scaled to Australia’s comparative stage of development. Such a commercial foundry partnership would be in the order of a $2 billion investment at a tailored entry point.

The ANFF network already has strength in the research-scale fabrication of compound semiconductors, which use two or more elements and are important in areas such as 5G, photonics and electric vehicles, and we should sensibly start there.

We can then work towards establishing a commercial silicon complementary metal-oxide semiconductor foundry, initially at mature process scale for which there are important markets, and over the longer term, progress to develop leading-edge chips requiring more investment.

We need to ensure that a local talent and innovation pipeline reinforces Australia-based commercial foundries by working with Australian universities and government R&D agencies, and via semiconductor-oriented degree and technical qualifications from universities and technical colleges. We should work with other trusted nations to strengthen this talent pipeline through coordinated research and training among key research universities.

We believe the plan we are putting forward, outlined in detail in the ASPI report, constitutes an implementable blueprint for Australia, not just a pie-in-the-sky idea. Nobody thinks it will be easy, but the strategic imperative is clear.

There are sceptics who will argue we are too small, and that our near-absent commercial chip fabrication capacity means we should concentrate instead on chip design and leave manufacturing to others.

That might be fine in a perfect, rules-based world, but in the real world of supply-chain uncertainty and darkening strategic horizons, we have to address this centre of gravity to avoid being forever a bit player, totally reliant on foreign chips.