Tag Archive for: Australia

Australia, France and finding equilibrium in Southeast Asia

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Australia and France have made significant strides towards repairing their diplomatic relationship in the nearly two years since Australia’s cancellation of its submarine contract with French company Naval Group. Technically, they are close neighbours, sharing a long maritime border in the Pacific. While French President Emmanuel Macron didn’t drop by Canberra during his ‘historic’ Pacific tour last month, his visit reinforced that a committed and energised France can complement Australia’s efforts in the region.

In addition to announcing new environmental initiatives, including to protect rainforests, Macron made a powerful statement denouncing malign Chinese influence in the Indo-Pacific, describing a ‘new imperialism appearing, and a power logic that is threatening the sovereignty of several states—the smallest, often the most fragile’.

Franco-Australian cooperation has bilateral benefits, but just as importantly enhances both countries’ roles as development and security partners for the whole Indo-Pacific. Individually, each state has much to contribute to the region: Australia as an active middle power and France with its significant naval strength. If both Canberra and Paris want to strengthen the regional order and mitigate the effects of strategic competition, they should find ways to jointly cooperate with Southeast Asia—the self-declared epicentre of the Indo-Pacific.

Southeast Asian states are looking for reliable partners amid intensifying US–China strategic competition. According to the 2023 State of Southeast Asia survey, the region’s most trusted partner for hedging against the uncertainties of this strategic rivalry is the EU, though there’s scepticism about its capacity and political will for global leadership. With Macron’s vision for his country as a puissance d’équilibre that keeps regional powers in balance and a clear Indo-Pacific strategy, France has shown that it’s willing to do more in the region. As a ‘resident nation’ (une nation residente) in the Indo-Pacific, France’s Minister of the Armed Forces Sébastien Lecornu has declared to the region that ‘your stakes are our stakes’ (vos enjeux sont les nôtres).

For its part, Australia is one of only four countries with a comprehensive strategic partnership with ASEAN. Canberra’s ‘strategic equilibrium’ narrative aligns well with France’s stance. Deepening ties with Southeast Asia and working to help it achieve its development priorities with partners such as France would give credence to Australia’s words on ASEAN centrality. For Southeast Asian countries that are hesitant to explicitly take a side in US–China competition, further cooperation could build Australia’s credibility as an Indo-Pacific partner.

However, Southeast Asia is a crowded and contested space, and Australia and France have so far identified few reasons for close bilateral coordination there. That’s despite the fact that they have a significant Southeast Asian presence already, both diplomatically (Australia has 16 posts in the region and France 11) and as development partners (Australia has committed $1.2 billion in aid to the region in 2023–24 and France contributed $1.3 billion in 2020).

The key is for Canberra and Paris to play to their strengths. Maritime security is of enduring interest to Southeast Asia and the wider Indo-Pacific, particularly where trade routes are concerned. Australia and France could build on joint transits in the South China Sea, the last of which occurred in 2021, and on their mutual interest in maritime domain awareness and supporting Southeast Asian efforts to counter illegal fishing.

Southeast Asia’s leaders often call for strengthening of ASEAN centrality and thus ASEAN-centric architecture. The ASEAN Defence Ministers’ Meeting and its working groups is an ideal place to do this, given that France is an ADMM observer and Australia is a member of ADMM-Plus.

Another critical area is climate change. In July, Australia committed $50 million to support Indonesia’s green-energy transition and Western Australia pledged to take further steps to support Jakarta’s nascent electric vehicle industry. At the January 2023 France–Australia ministerial consultations, the two countries articulated other ASEAN priorities on which they could work more closely, such as connectivity and economic cooperation.

Aside from Southeast Asia-wide cooperation, deepening trilateral engagement between Indonesia, Australia and France would have benefits. As the only Indo-Pacific states with territory in both the Indian and Pacific Oceans, the three countries have a special stake in the region. In France’s case, a ‘powerful strategic intimacy’ is emerging between Jakarta and Paris based mainly on Indonesian defence acquisitions from French manufacturers. Paris’s burgeoning defence relationship with Jakarta was demonstrated most recently with a deal to supply fighter jets and submarines to the Indonesian military.

At the recent Australia–Indonesia leaders’ meeting in Sydney, Australian Prime Minister Anthony Albanese endorsed plans to upgrade bilateral defence ties to the treaty level. Greater maritime capacity in the Indonesian navy, supported by French capability and Australian training, would allow Jakarta to do more with its partners. There’s also value in exchanging views trilaterally on maritime security, humanitarian assistance and disaster relief (particularly how the FRANZ Arrangement between France, Australia and New Zealand could engage Indonesia), and environmentally resilient infrastructure.

This would not necessarily need to start at, or grow to, the official or ministerial level to be useful. A Track 1.5 or Track 2 dialogue is a more feasible and less complicated starting point for the grouping. In proposing such as dialogue, Australia must be aware of how it would fit within the already crowded minilateral space in the region and Indonesia’s appetite for engaging with it. But it could give Australia an opportunity to address Indonesian concerns about its strategic outlook since the announcement of AUKUS in the context of a security dialogue with France, which is perceived as being more independent of the US alliance system.

Of course, Australia and France have other commitments to the Indo-Pacific and in other parts of the world. Still, when it comes to supporting Southeast Asia, two heads working together are better than one.

Will China target Australia and how would Australia respond?

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In the latest issue of Australian Foreign Affairs, the Lowy Institute’s Sam Roggeveen makes assertions about the priorities of China’s nuclear targeting of Australia, as well as what he claims will be Australia’s missile targeting of Chinese territory. I consider much of what he has written to be wrong.

In ‘Target Australia: Is the alliance making us less safe?’, Roggeveen asserts that the basing of US B-52 bombers at the Tindal airbase near Darwin will make the site a priority nuclear target of China because the bombers could strike China’s nuclear missile silos and bases, early warning radars and nuclear command and control facilities. But the distance from Tindal to military targets in the south of mainland China is over 4,500 kilometres and the B-52’s operational speed is subsonic (900 km/h). This means that it would take in the order of five hours to reach key military targets in China’s south. And flying from Tindal to Beijing would take more like eight hours, providing China with plenty of warning.

In contrast, the joint US–Australia intelligence facility at Pine Gap near Alice Springs will be by far China’s most important and time-urgent nuclear target because of its ability to give the US instant, real-time warning of a Chinese nuclear attack, the precise number of missiles, their trajectory and their likely targets. There’s nothing novel about Pine Gap being identified by potential nuclear adversaries as a priority target. In the late 1970s, it was made quite clear to me during talks in Moscow that Pine Gap was a priority Soviet nuclear target. And in 2016, I was warned: ‘In the event of nuclear war between Russia and America, you Australians will find that nuclear missiles fly in every direction.’

The fact is that the KGB had detailed evidence in the late 1970s from two US spies, Andrew Lee and Christopher Boyce, with access to the Pine Gap ‘intelligence take’ of its key role—together with the joint facility at Nurrungar near Woomera—in detecting and tracking Soviet ballistic missiles and listening to the USSR’s military communications. We can assume that the Russians will have briefed China about Pine Gap, which now includes the space-based infrared detection capabilities of the old Nurrungar base, being a much more time-urgent target than Tindal. Roggeveen asserts that China would not strike Pine Gap because of its important role in US nuclear deterrence. That is not my view: we’re not talking about deterrence and nuclear arms control here but a decision by China to use nuclear weapons. Tindal would not be targeted with the urgency that Roggeveen claims.

Roggeveen asserts that Australia’s acquisition of Tomahawk cruise missiles ‘can be interpreted only one way: Australia wants the capability to strike targets on Chinese soil’.  I don’t know how Roggeveen’s imagination jumped to this conclusion. But the 2023 defence strategic review recommends that Australia’s concept of defence have ‘a focus on deterrence through denial, including the ability to hold any adversary at risk’. That does not include striking China’s territory, which would be a dangerous gamble by Australia. But attacking China’s military bases in the South China Sea and contingently in the South Pacific certainly should be included in our future targeting doctrine if—as Roggeveen accepts—there’s a likelihood of a ‘Chinese military assault on Australia’.

Deterrence theory holds two alternatives: deterrence by punishment and deterrence by denial. Deterrence by punishment gives priority to destroying the enemy’s territory, military bases and key population centres. By comparison, deterrence by denial requires Australia to hold potential adversaries’ forces and forward-based military structure at risk from a greater distance rather than waiting for them to operate in a threatening way in our immediate approaches.

My colleague and a former deputy secretary of Defence, Richard Brabin-Smith, and I wrote an ASPI report in 2021 titled Deterrence through denial: a strategy for an era of reduced warning time. We argued that Australia needed to acquire highly accurate, long-range missiles. In this way, we could deter military actions against Australia’s interests with less dependency on warning time than in the past. Holding a potential adversary’s forces at risk from a greater distance would influence the calculus of enemy costs involved in threatening Australian interests directly. For this we need to acquire long-range anti-ship strike missiles, cyber capabilities and area-denial systems.

Any credible future enemy operating directly against us will have highly vulnerable lines of logistics support back to its home base in North Asia. The closer it comes to our strategic approaches the more vulnerable its logistic support will become. If a potential adversary such as China develops—as it already has—several military bases in the South China Sea (or in the South Pacific in future), Australia must be able to destroy them if necessary.

Nowhere in the defence strategic review or in our own writings is there a suggestion that Australia needs to be able to strike mainland China. Attempting such deterrence by punishment would be extremely provocative and dangerous given China’s military capabilities. And no commentator in their right mind would suggest such a high-risk defence policy. The idea of being able to inflict unacceptable punishment on China is not within the realms of credible Australian defence policy.

There are further sweeping assertions by Roggeveen that the AUKUS relationship will increase the likelihood that Australia will be locked automatically into fighting alongside the US should Beijing go to war over Taiwan ‘or for another reason’. It will, of course, be important that we assert our absolute sovereignty over the missions to which we commit our future nuclear-powered submarines (SSNs). When Britain decided to buy US Trident missiles for its ballistic missile submarines (SSBNs), London made clear that it would not be subordinate to Washington’s nuclear targeting priorities. Washington confirmed the UK’s sovereignty in formal writing to the British government in this vital regard.

If a future Australian government agrees, our Virginia-class SSNs will be able to use 2000-kilometre-range anti-ship missiles to strike China’s forces in the Taiwan Strait. That could be done from the safety of deepwater trenches east of the Philippines without detection.

As to other roles for our SSNs in a Taiwan contingency, we should consider discussing with Washington our capacity to deny the narrow straits of Southeast Asia to China’s overseas trade (it imports 80% of its oil through the Malacca Strait). That would be an important, independent military role for Australia, but without the potentially high cost of losing our relatively small number of military assets in a direct war over Taiwan.

Roggeveen is correct when he states that the US would be unlikely to subordinate nuclear-related missions to Australia’s submarine fleet. Even so, he observes that Australian SSNs might encounter Chinese SSBNs during future operations. In the Cold War, we regularly operated against the Soviet Navy in close-quarter operations that were greatly valued by Washington. UK SSNs trailed Soviet SSBNs for prolonged periods at distances as close as 500 metres and practised what was coyly termed contingency ‘target acquisitions’. In any such future occurrences, we would need ironclad rules of engagement reflecting our national sovereignty targeting priorities.

However, the main problem with Roggeveen’s article is that he focuses entirely on the dangers of resisting and deterring China without comparing that approach with the dangers of not resisting and not deterring China. That is not a prudent approach to making Australia’s security policy.

Roggeveen concludes that it’s not in Australia’s strategic interests to be drawn into a war over Taiwan. But neither is it in our interests to see a US defeat in such a war precipitating the acquisition of nuclear weapons by, say, Japan and South Korea. And neither is it in our interests to see Taiwan’s vibrant democracy crushed by the brutal military occupation of the People’s Liberation Army. There should be no place for such value-free judgements in the formulation of Australia’s defence policy.

How Australia can work with France in the western Indian Ocean

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The western Indian Ocean—home to the island states of Mauritius, Madagascar, Seychelles and Comoros, as well as the French territories of La Reunion and Mayotte—occupies little space in Canberra’s strategic imagination. But it still has the potential to affect Australia’s strategic interests. In a new report by the Asia-Pacific Development, Diplomacy & Defence Dialogue (AP4D), we identify France as a critical partner for Australia to multiply its impact in the far western fringe of the Indo-Pacific.

Australian interests are engaged in this subregion in important ways. It is a source of maritime insecurity, including transnational crime, and is an arena for strategic competition in which the US, India, China and Russia are all active players. While the balance of power in the western Indian Ocean has been favourable, or at least benign, to Australian interests for a long time, growing Chinese influence and the potential for changes to the status of Diego Garcia (which hosts a US military base) might present strategic risks for Australia to manage. Moreover, with Australia hosting the Indian Ocean Conference for the first time in 2024, as well as pursuing bids to host COP31 in 2026 and to secure a UN Security Council seat in 2029–30, it’s important that Canberra actively build deeper relations with a broad range of small island developing states.

Australia is a generally well-regarded actor in the western Indian Ocean. However, its modest presence and contribution in the subregion seem conspicuous to island states that view Australia as a natural Indian Ocean partner. They see Australia’s recent step-up in the Pacific and they still remember—and cite—Australia’s aid contributions in the lead-up to its last UN Security Council term (2013–2015).

But the reality is that Australia can’t substantially boost its presence or engagement in this distant part of the world right now—not with the fiscal pressures it faces at home and the uncertain strategic environment it’s navigating in the Pacific and Southeast Asia.

That’s where partnerships become even more important.

Australia should see France’s (and the EU’s) significant presence in the western Indian Ocean as an opportunity to boost its own influence on shared interests and capabilities. As well as its overseas local territories of Reunion and Mayotte, France has resident missions in Mauritius, Madagascar, Seychelles and Comoros. In 2020, it contributed about $695 million in official development assistance. France also maintains a resident military presence of 2,000 personnel, five naval units and four aircraft. Australia, meanwhile, has just one small post in Mauritius covering the entire subregion, equipped with only a small direct aid budget.

There are five broad areas where collaboration with France in the western Indian Ocean could help advance both countries’ strategic interests and make a positive contribution to Indo-Pacific stability.

First is playing an active role in fostering Indian Ocean and Pacific island connections. Covering both main working languages (English and French) of the two regions, Australia and France are well placed to help facilitate dialogue and build capacity to confront the challenges small island states face. As Rory Medcalf has noted, an ‘oceans forum’ could join up these two maritime regions on ‘issues such as fisheries management, health security, infrastructure, climate change and the common problem of how to manage pressures from great powers’.

Second is strengthening Indian Ocean regional architecture. As much as possible, Australia should seek to channel greater coordination with France through existing regional institutions, especially the Indian Ocean Rim Association. This will help boost the association’s centrality and generate broader regional participation. Australia should also consider formalising its relationship with the Indian Ocean Commission by becoming an observer. This would boost Australia’s status as a partner to the group and be a clear signal to France of Australia’s intent to contribute practically to the region.

Third, Australia should consider making modest strategic contributions to French-led and EU-led development programs, especially those focused on maritime security and safety. Australia has previously provided this kind of support in the subregion through the Australian Maritime Safety Agency. So, Canberra could consider how AMSA or the Australian Transport Safety Bureau could make niche contributions to capacity building by working with French counterparts.

Maritime domain awareness could also be a useful area for collaboration. France and the EU are already significant contributors to improving maritime domain awareness in the Indian Ocean (especially through the CRIMARIO II initiative). One possible avenue could be to work together to enhance the fusion centres in the western Indian Ocean: the Regional Maritime Information Fusion Center, based in Madagascar, and the Regional Operations Coordination Center, based in Seychelles. In particular, Australia should consider how its experience with the Pacific Fusion Centre could be shared with Indian Ocean counterparts.

Fourth, given the significant transnational crime issues in the western Indian Ocean, especially drug trafficking and illegal fishing, it is important to build the law enforcement capacity of developing states with large exclusive economic zones. The Australian Border Force and Australian Federal Police, working with the Department of Foreign Affairs and Trade, could consider how they could work with French counterparts to enhance the ability of western Indian Ocean states to identify and prosecute transnational crime.

Finally, disinformation is a significant concern in the western Indian Ocean island states. There have been several documented instances in recent years, and the EU already supports training and capacity-building aimed at countering disinformation in the subregion. Australia could explore opportunities to work with France, the EU, civil society and local and international media to complement these efforts, focusing on raising awareness of disinformation and developing skills to recognise and counter it.

Strategic contributions to French- and EU-led initiatives would increase Australia’s influence. They would also create greater diversity in Australia’s key Indian Ocean partnerships beyond India—which is important given concerns in some parts of the region about New Delhi’s influence.

Australia’s support would benefit France, too. Australia can convey aligned messaging with a different voice, without the historical baggage that France and others (like the UK and US) carry. And in complex times, aligning messages and efforts has never been more important.

Pacific treaties must be built with care and nurtured once they’re in place

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Security agreements are an increasingly hot topic in the Pacific as Australia, the US, China and New Zealand seek broad arrangements across the region. Melanesian countries have attracted the most attention; over the past 15 months, Papua New Guinea, Fiji, Vanuatu and Solomon Islands have each signed agreements with at least one partner. Some have been in development for years, and some of those build on previous agreements. Existing and developing agreements are under scrutiny to ensure they are fit for purpose but are also inevitably—and sometimes justifiably—viewed through the lens of strategic competition. Australia’s commitment to respectful and reciprocal security engagement is contingent on nurturing relationships, listening to the needs of our Pacific partners, and adapting to new challenges.

On 1 June, Prime Minister James Marape announced that Papua New Guinea wasn’t ready to sign the bilateral security treaty it has been working on with Australia due to concerns that the wording encroached on PNG’s sovereignty. The treaty was planned as part of the PNG–Australia Comprehensive Strategic and Economic Partnership signed in August 2020. In January it was announced that negotiations would hopefully conclude in April for a signing in June. This timeline should have been viewed as aspirational at best, and Marape’s postponement hasn’t come out of nowhere.

Only a few weeks earlier, PNG Defence Minister Win Daki signed a security agreement with the US, stirring protests by PNG university students and the raising of sovereignty concerns by commentators who saw a leaked early draft. PNG and the US have since made the agreement public, demonstrating transparency and signalling that the agreement is intended to provide better support for PNG. It will still need to be debated in PNG’s parliament to be ratified, and that will take time. The US having open access to PNG’s military facilities has landed easily in Australia because the US is our friend; had PNG’s agreement been reached with China instead of the US, it would have sent shockwaves across Canberra. And the agreement’s comprehensiveness reflects the deep strategic preparations going on in Washington.

The public criticism of the US–PNG agreement wouldn’t have been lost on Marape. His caution may indicate that his government did listen and will ensure that the Australian treaty’s language is appropriate and isn’t seen to encroach on sovereign rights. The PNG government wants to ensure that this agreement works best for the country and doesn’t affect its sovereignty. Australia wholeheartedly supports—or at least should support—attention being paid to any international agreement. It’s not something to be rushed, and it’s certainly not a race. To alleviate any concerns when the details are agreed, Australia should work closely with the media alongside the PNG government to explain what the treaty is, how it differs from past arrangements and agreements, and how both countries will benefit.

The PNG government’s hesitancy does not represent a failure in the bilateral relationship. Australia and PNG are friends for the long haul and their security relationship is deep, enduring and substantial for both nations. That shouldn’t be forgotten as they exercise patience to get things right.

The bilateral security treaties and agreements Australia is pursuing across the Pacific are being treated as treaty-level arrangements. They are the highest and most formal of agreements—and they must be ratified by parliament and registered with the United Nations. The UN maintains a treaty collection and its charter states that any member entering into a treaty should register it with the UN to ensure that it carries weight under international law. For Australia, these arrangements may bestow ‘partner of choice’ status, but not all partners will put agreements on the same pedestal as treaties.

On 28 June, Solomon Islands Prime Minister Manasseh Sogavare said that his country’s security agreement with Australia would be reviewed to take into account the changing security challenges faced by both countries. Although this agreement is Australia’s longest standing and perhaps most successful bilateral security treaty in the region, in a rapidly changing environment, sometimes a refresh is necessary. The Australia–Solomon Islands agreement was the first of its kind in the Pacific and was signed in 2017 to follow the Regional Assistance Mission to Solomon Islands.

Australia’s response during the 2021 Honiara riots was an example of a bilateral security treaty being used to its full potential. It was designed with the ability to incorporate other partners into security responses, so New Zealand and Fiji also assisted Solomon Islands under Australia’s arrangement.

Ironically, the effectiveness of Australia’s support under this treaty may have encouraged the Solomon Islands government to formalise its security agreement with China. That agreement allows Solomon Islands to call on China’s security forces in times of instability and provides Sogavare with an alternative to the West. The details of the Solomon Islands–China agreement have not been made public—a stark indication of China’s intent.

China’s agreement doesn’t have the same protections by the UN as Australia’s treaties. And secret wording in secret agreements leaves much to interpretation. The people of Solomon Islands and other foreign partners have been left with unanswered questions and grave concerns about what the arrangement may mean for future engagement between the two countries. By contrast, if Australia and Solomon Islands update their security agreement, it will undoubtedly be public and transparent.

Australia and Vanuatu are also progressing a security agreement that was signed in December 2022. Vanuatu’s Prime Minister Ishmael Kalsakau has indicated that he’ll ask parliament to ratify it this year. Although the agreement is designed to streamline Australian assistance and enhance cooperation across a wide range of security areas, and while it will ultimately deliver clear benefits to Vanuatu, it will likely remain controversial.

Sovereignty concerns arising from the agreement were among the issues raised during attempts to remove Kalsakau from power this year. While the call for Kalsakau to go was withdrawn, it demonstrated the weight placed on geopolitical competition and security in Vanuatu. The agreement has been made public, but little effort has been made in Vanuatu to explain its intent and its benefits. Australia should encourage discussion on security cooperation by the Vanuatu government and in the media.

In October 2022, Australia and Fiji signed a status of forces agreement, or SOFA. It is simpler than a bilateral security agreement and provides a legal framework to cover practical issues for visiting military forces, including customs procedures and criminal and civil jurisdiction. The agreement will make many activities easier, as in Operation Bushfire Assist, when 54 members of Bula Force comprising members of the Republic of Fiji Military Forces and Fiji’s National Fire Authority deployed to Australia. Last week, New Zealand and Fiji announced their own status of forces agreement, along with a reaffirmation of their security partnership. SOFAs serve their own unique and practical purpose but can lead to more comprehensive partnerships. The US–PNG security agreement was said to simply elevate their existing SOFA. But these are very different types of arrangements.

Beneath these agreements lie memoranda of understanding, or MoUs—the simplest international display of friendship and cooperation and essentially a handshake deal written down. MoUs are often precursors to greater, formalised cooperation and agreements but tend to fizzle out or under-deliver if the attention or will of either party shifts.

MoUs should spark curiosity more than concern but remain a good indicator of intent. Any bilateral arrangement should exist to steer existing friendships towards more efficient and beneficial activities. Thorough consultation is vital, as China learned when it tried, and failed, to secure a regional security agreement with 10 Pacific island countries in May 2022.

Regardless of the status of its bilateral security agreements and negotiations, Australia has deep defence and security relationships across the Pacific, thanks in no small part to its widely successful and extremely well-funded defence cooperation programs. These include the Pacific Maritime Support Program, which has delivered dozens of patrol boats to protect exclusive economic zones, counter illegal fishing and support disaster relief operations.

Australian Defence Force officers are embedded across regional defence forces and, as announced on 2 May, PNG Defence Force personnel will be embedded with the ADF. Our defence relationship with Fiji has kept us connected—through co-deployments into the region for stability operations and disaster relief, through Australia’s infrastructure assistance including to Fiji’s Blackrock defence facility, and through a comprehensive maritime capability relationship.

With Australia’s security engagement and relationships so entwined across the region, a transparent bilateral treaty coming from a true and trusted partner is paradoxically both a big leap forward in the relationship and, for some, almost business as usual. Beyond making Australia’s defence and security efforts in the region more comprehensive and bringing together more elements than just defence in a whole-of-government approach, these agreements should be viewed as another step in deep relationships that ingrain the participants in each other’s systems and make them more dedicated to ongoing engagement.

As competition continues to create tension across the Pacific and security threats become more complex and intertwined, Australia’s regional and bilateral relationships will be crucial. Pacific security will remain intrinsically linked to Australia’s own security. But security treaties and agreements, no matter how legitimate and public they are, aren’t anything without the building blocks before them, or the action that follows.

Opportunities for Australia–ASEAN collaboration on critical minerals

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Southeast Asia’s energy transition is coming to life as the development of green technologies accelerates across the region. Securing critical minerals will be crucial to this process, and Australia should work with Southeast Asia to realise their mutual goals in this area.

If Southeast Asian countries pursue policies in accordance with the Paris agreement to limit global temperature rises to 2°C, the market size for green technologies in the region is projected to increase from just under US$5 billion in 2020 to nearly US$20 billion in 2030 and US$50 billion in 2050. Several Southeast Asian states have introduced national agendas and policies to address the impact of climate change and increase their energy security through renewables. Some also see the energy transition as an opportunity to pursue more sustainable economic growth by becoming players in the electric vehicle and battery supply chains.

Critical minerals are essential components of many clean-energy technologies. More critical minerals are used to build solar farms, wind farms and electric vehicles than fossil-fuel-based alternatives, and the growing demand for green technologies in Southeast Asia will amp up the pressure on governments to provide a robust and resilient critical-mineral supply chain.

Mining and processing critical minerals for exports could bring immense revenues to Southeast Asian states and help them establish themselves in regional supply chains for green technologies. A strong mining and refining sector would also attract investment in green energy manufacturing, such as battery production. By building these sectors, Southeast Asian states would not only have a secure supply of critical minerals domestically, but also stand to benefit in the market, helping them reinvest further in their energy transition.

Some Southeast Asian states have already begun to invest in refinement and processing. Indonesia, for instance, has leveraged its position as the world’s biggest nickel producer to set up domestic processing facilities, even going as far as enacting protectionist bans on the export of unprocessed nickel ore.

The region could be a major player in supplying critical minerals and developing key supply chains. ASEAN already accounts for 46% of global nickel production and 34% of tin production. Indonesia and the Philippines are two of the world’s largest producers of nickel, which is used in batteries and electrolysers. Rare-earth minerals, a critical component for producing certain types of electric vehicle motors and wind turbines, are a major export for Myanmar.

But in contrast to their abundant resources, Southeast Asian economies’ capacities to refine and process critical minerals are mixed. The region contributed only 2% of global aluminium output in 2020 and 3% of smelted and refined copper. However, it is picking up the pace when it comes to producing and refining rare earths. Between 2015 and 2020, Southeast Asia’s share of global raw rare-earth production surged from 0.6% to nearly 10%, and the region went from providing 2% of rare-earth refining and smelting to around 14%. Raw nickel, tungsten and manganese production also grew significantly.

Southeast Asia also possesses significant capacity in advanced downstream production using critical minerals. Malaysia and Vietnam are the second- and third-largest manufacturers of solar panels in the world, and Singapore is a research and development hub for these technologies.

Australia is also a significant player in supplying critical minerals. In 2021, half of the world’s lithium came from Australia. It is also the second-largest producer of cobalt and the fourth-largest producer of rare earths. Australia’s new strategy for its critical minerals sector aims to develop a downstream industry for processing and refining minerals onshore to ensure resilient and diversified supply chains. While this will help promote sustainable growth in the country’s domestic manufacturing and industrial sectors, Australia must also comply with the highest environmental, social and governance standards. The recent controversy over Australian rare-earth mining company Lynas’s operations in Malaysia further emphasised the need for Australia to develop its own processing capacity and reduce its reliance on foreign facilities.

Southeast Asia and Australia have areas of shared interest in developing their critical-mineral industries. Both are investing in critical-mineral supply chains by developing onshore processing, aimed at preventing bottlenecks in the supply chain. Like Australia, ASEAN emphasises the importance of environmentally friendly and socially responsible mineral development practices. These shared goals can serve as the foundation for future cooperation.

Yet collaboration on critical minerals hasn’t featured in recent initiatives between Australia and ASEAN, including the ASEAN–Australia comprehensive strategic partnership and the recently concluded free trade agreement between ASEAN, Australia and New Zealand. The Australia–Vietnam Enhanced Economic Engagement Strategy includes some minerals and mining initiatives, but its primary focus is on facilitating Australian coal and mineral exports to Vietnam.

Given Australia’s technological advantages, Canberra should consider providing support to Southeast Asia to help it develop environmentally friendly and socially responsible mining and refining practices. Capacity building is another possible area of cooperation. Southeast Asia is anticipating a rush of investment in extracting critical minerals, but many governments are not well equipped to handle, guide and regulate this level of activity. Australia could assist with investment screening and monitoring to ensure businesses comply with environmental and governance standards.

Since Australia is also looking to develop its downstream industry, it should consider embedding its critical minerals projects, when suitable, into existing supply chains in the region. An example would be establishing joint ventures to produce electric-vehicle batteries, which can leverage the comparative advantages of Australia and Southeast Asian states. Critical-mineral resources in Australia and Southeast Asia are complementary. Southeast Asia has an advantage in nickel, tin and bismuth production, which Australia doesn’t currently consider critical minerals. Australia is a major source of rare-earth elements, manganese and cobalt, which Southeast Asia doesn’t produce at scale. This complementarity can facilitate further cooperation.

Of course, there are challenges to be overcome. ASEAN hasn’t issued an official definition of critical minerals, while Australia has listed 26 minerals as critical. This discrepancy might create bureaucratic hurdles. Both Australia and Southeast Asia hope to attract foreign investment to develop their downstream industries, so a certain degree of competition is unavoidable. The resources development sector in Southeast Asia is rife with corruption and lacks accountability and transparency. This issue is especially prominent in countries with weak rule of law, where it will be a struggle to regulate investment and mining activities. And in areas prone to internal conflict like Myanmar, armed groups could capture mining production and use profits to entrench their power. But if Australia does its due diligence when considering cooperation, it shouldn’t be discouraged. This is a major opportunity for Canberra to strengthen its strategic relationship with the region.

AUKUS needs to focus on critical minerals

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Much of the public policy discourse on AUKUS, the security partnership between Australia, the UK and the US, has focused on nuclear-powered submarines (Pillar 1). Far less attention has been paid to Pillar 2, which aims to accelerate the partners’ collaboration on developing advanced capabilities such as hypersonics and autonomous systems. These capabilities, and the rules-based order they uphold, depend heavily on critical minerals. Yet the AUKUS agreements don’t specifically address the supply chains for processed critical minerals and their resulting materials.

Today, ASPI released a report by Ben Halton and Kim Beazley, AUKUS and critical minerals: hedging Beijing’s pervasive, clever and coordinated statecraft, which explores global critical-mineral supply-chain vulnerabilities. The authors argue that through AUKUS, the UK and the US should engage Australia to spearhead mineral diversification.

China eclipses not only AUKUS for processing critical minerals into usable forms but the rest of the world combined. Without a reliable supply of critical minerals, states are open to economic coercion in various technology industries. Defence manufacturing is particularly exposed to supply-chain challenges.

Beijing’s economic coercion, underwhelming global action and haphazard domestic policy have highlighted the risk of disruption to global rare-earth and critical-mineral supply chains. China has developed a virtual monopoly over rare-earth elements and significant control of critical-mineral supply chains and is willing to use its position of strength to limit access to those strategically important materials.

The many attributes of China’s dominance in critical minerals include complex and carefully guarded processes for making critical minerals usable. That extends to manufacturing essential inputs to technologies that require rare earths, such as permanent magnets, which enable technologies such as leading-edge missile guidance, satellites and aircraft. All of that is backed up by strong investment in top-quality research. China’s universities and national labs now lead the world in high-impact research on critical-minerals extraction and processing, highlighting their continued efforts to innovate and achieve technological breakthroughs in this area. ASPI’s Critical Technology Tracker provides empirical evidence of China’s lead in the publication of research on critical minerals extraction and processing.

Secure access to processed critical minerals enables the emerging technologies that will ‘win’ or, better still, deter the next global war. It will also help to ensure the continuity of a global economy free from the risks of coercive statecraft. China would benefit, too, from a more diverse supply, since its requirements will continue to grow over the coming decades.

It’s a positive sign that so many like-minded countries like Japan, the US, Canada and Australia aren’t just identifying that there’s a problem but are willing to take action. Unfortunately, creating resilient and commercially viable supply chains is beyond the reach of any one nation. Now is the time for ‘minilateralism’ to take centre stage.

Halton and Beazley argue that AUKUS, as an existing minilateral partnership, is well situated to tackle critical minerals and rare earths in concert with other relevant countries. In doing so, they offer five priorities for consideration. Given that all AUKUS capabilities rely on critical minerals, the AUKUS countries should add critical minerals to AUKUS Pillar 2 and, in doing so, develop a consistent definition of critical minerals among the partners. Contextualising AUKUS against that definition is necessary to prompt informed action. The Australian government must also refine its 2022 critical-minerals list to reflect better the strategic situation we face rather than primarily commercial factors.

AUKUS should be the premier minilateral mechanism for creating resilient critical-mineral supply chains for each partner while working closely with friends and allies. This is consistent with Pillar 2’s remit not being an exclusive arrangement. And it will require the AUKUS partners to cast aside any reservations about working intimately with one another.

AUKUS provides many opportunities for like-minded countries to address the supply-chain vulnerabilities for critical minerals and rare earths. However, other mechanisms could be used in parallel with AUKUS, which could draw in additional partners, who would bring with them demand, capital, experience and technology.

For example, Japan has had plenty of experience working with Australia, Australian companies and Australians to create supply-chain security for energy and rare earths. The Japanese company INPEX’s investment in northern Australia’s Ichthys LNG is among the world’s most significant oil and gas projects. This joint venture provides energy security for Japan. For more than a decade, the Japanese government has invested in Australian company Lynas Rare Earths to gain independence from Chinese processors.

Australia’s trilateral relationship with Japan and the US, and the Quad (which brings India into the picture), should also be part of Australia’s approach to providing the world with an alternative, resilient rare-earth and critical-mineral supply chain.

Australia offers an unrivalled rallying point to drive secure critical-mineral supply among a wide field of vested nations, using AUKUS but not limited to AUKUS partners. Australia has globally superior reserves and substantial expertise, so it has a crucial role. The Australian government must continue to prioritise policy action to create new economic opportunities and strengthen national resilience and security.

Shaking Australia’s ‘state vs state’ attitude to innovation

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We need to address the elephants in the room. Yes, elephants. There are eight of them—each state and territory, and they are competing at the expense of improving Australia’s innovation economy and strategic objectives.

The defence strategic review (DSR) has highlighted the need for a truly national approach to Australia’s security in the face of deteriorating strategic circumstances. This calls for new approaches, new technologies and new markets for these technologies. Critically, the DSR calls for increased domestic manufacturing, and the capacity to ‘rapidly translate disruptive technologies into ADF capabilities’.

In the period 1995 to 2020, as noted by Harvard University, Australia’s economic complexity ranking declined from 55th in the world to 91st. This decline is important as it illustrates the type of jobs available to Australians, which impacts on the talent that the country can develop and can attract. Ultimately it impacts Australia’s ability to meet national economic and security targets.

The Australian government is currently seeking to halt this decline and to rebuild a manufacturing base through the National Reconstruction Fund (NRF). This initiative seeks to address economic and resilience challenges, including renewables and low emissions technologies, and defence capability. The DSR has reinforced this need.

There are, however, pressures in Australia preventing it achieving this goal. The first is the propensity for multiple states to want to host technological developments for their own parochial, rather than national, purposes. This has repeatedly resulted in similar organisations being established in multiple states for addressing the same problem. The result is a dilution of the overall national effort. The second, which accentuates the effect of the first, is that in many areas of innovation, Australia is too small a market to be cost effective in comparison with international competition, and is starting a long way behind. Competition between states in many priority areas for innovation will therefore only dilute the overall national effort.

While competition is generally recognised as good, the literature on technology clusters and the ‘spill-over’ effects of clustering shows that having multiple related high technology activities occur within a geographically constrained area is most effective. Benefits include industrial efficiency, workforce development and availability, knowledge transfer, and invention intensity.

The bottom line is that unless Australia can limit this interstate jostling, the benefits of the NRF and the objectives of the DSR are unlikely to be realised to the extent that the relevant ministers desire. The national manufacturing base will not be significantly reconstructed, Australia will not commence an inexorable climb up global complexity rankings, and national resilience will not improve. Most importantly, Australia’s ability to deter conflict will be inhibited.

The federal government needs to get these elephants (the states) talking to each other in meaningful and tangible ways. The National Cabinet needs to coordinate more on innovation and, where there is a significant gap in a certain area, consider empowering a single state to have the coordination role for the overall national good.

One way to overcome this and its pernicious effects is to implement a model of ‘coordinated federalism’ on innovation. At its core should be the establishment in each state of specific centres of excellence for the ‘national priority areas’ in the NRF initiative and in AUKUS Pillar 2. These centres would oversee and publish technical and commercial standards and other benchmarks for new technologies, and products that flow from those technologies. They would have physical demonstration facilities and assist departments on public policy and trade initiatives. They would be useful training centres and have common facilities against which new manufacturing flowsheets can be tested, varied and validated.

These centres would become the kernel for the establishment of technology-based clusters. They would be able to engage with organisations and institutions in other states but would be free of the direct competition that currently inhibits inventiveness, saps innovation energy, and dilutes national effort. Importantly, the centres would interface with the incoming Australian Strategic Capability Accelerator for maximum industrial and capability impact.

This proposal is not revolutionary, nor is it a backflip on past work. It does not seek to compromise or reduce current state efforts on existing, mature industrial ecosystems or the projects where public-private capital partnerships have already formed. It would not redistribute current technologies or organisations.

This model has been successfully implemented in other countries, and there are multiple developing areas and new horizons where such a model could be applied in Australia: critical mineral processing, space domain awareness, biotechnology, synthetic biology, waste processing, semi-conductors, super-capacitors, and nanoscale robotics, just to name a few. The length of the list of critical technologies to the national interest means that there will be more than enough to go around.

If Australia truly aspires to new horizons and wants to cross new frontiers, interstate politicking is a headwind it simply must overcome. But if it does, Australia can more efficiently develop new technologies and applications, grow the national economy, and build the resilience it will need into the future.

Smooth sailing or choppy waters for Australia, NZ and the US in the Pacific?

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Last week’s announcement that US President Joe Biden would not travel to Papua New Guinea to meet with Pacific Islands Forum leaders was met with disappointment. Expectations were high: the White House had labelled the visit ‘historic’—it would have been the first time a sitting US president visited a Pacific island country—and claimed it would further reinforce the ‘critical partnership’ between the US and the Pacific islands.

The meeting was a follow-up to the first-ever US–Pacific Island Country Summit held in Washington last September. But as far as sequels go, this one was a fizzer. Biden’s planned visit was looking shaky even before news of its cancellation, with controversary following leaks about the proposed US–PNG defence cooperation agreement.

But the PIF leaders went ahead with their meeting, and the decision by New Zealand Prime Minister Chris Hipkins to attend, despite neither Biden nor Australian Prime Minister Anthony Albanese going, sent a strong signal to the Pacific of New Zealand’s commitment to the region. The Australian government has missed an opportunity to send a clear message that Australia shows up in the Pacific even when its larger alliance partner, the US, doesn’t.

This brings us to the challenges facing Australia and New Zealand. In response to geopolitical shifts in the region and more broadly, Australia, New Zealand and the US have individually, and in cooperation with each other, sought to enhance their relationships with Pacific island countries and deepen their involvement in the region.

However, as we argue in our new ASPI report, released today, cooperation between the three partners faces several challenges—and raises questions for Australia and New Zealand.

Despite the rhetoric—at times tokenistic—from the three partners about respecting Pacific agency, ambitions and activism, genuine change requires the kind of mindset shift that may prove challenging, particularly for the US. For example, the Partners in the Blue Pacific initiative reflects outdated modes of thinking about the power dynamics underpinning the three nations’ activities in the Pacific. There are limits to the assumed leadership of Australia, New Zealand and the US, as the Solomon Islands – China security agreement highlighted.

China, and others, are here to stay. Pacific island countries have options—and alternatives—to their status quo relationships. As unwelcome as Australia, New Zealand and the US may find China’s presence in the region, they need to plan for how they will work alongside a range of partners in the Pacific. This isn’t about accommodation, necessarily, but nor is it about constraint when Pacific island countries pursue their own interests.

It’s becoming harder for the three partners to balance their interests and values while at the same time attempting to reconcile broader strategic interests with Pacific priorities. Australia, New Zealand and the US pride themselves on being liberal democratic nations committed to upholding human rights and the international rules-based order. But respect for those values is being tested by their perceived need to advance their strategic interests.

Controversy over the AUKUS partnership raises questions about how closely the partners want to relate to each other in the Pacific islands region. Differences among Australia, New Zealand and the US mean that, in some instances, they may wish to carefully consider risks to their reputations and to their individual relationships with Pacific island countries. This includes New Zealand’s stance on nuclear issues, as well as Australia’s and New Zealand’s abilities, as members of the Pacific Islands Forum, to act as a constraining influence on US ambitions in the Pacific when they cut across collective Pacific interests. The US needs to appreciate that Australia and New Zealand are bound to the Pacific through geography, history, constitutional relationships and, increasingly, identity.

The challenges we outline in our report are not insurmountable. But how Australia, New Zealand and the US partner with the Pacific—and with each other—matters deeply. These considerations take conventional responses to strategic competition in the region beyond the binary reaction to China as the destabilising actor, and demand that the three partners reflect on their own contributions to peace and security.

We therefore recommend that, when seeking to enhance their engagement in the region and work together, Australia, New Zealand, and the US should ensure that Pacific priorities direct activity, not their own. It’s important for the partners to ensure that their initiatives don’t undermine or supplant existing regional frameworks but instead expand on established mechanisms. And, importantly, Australia, New Zealand and the US must avoid competing with one another and instead cooperate more closely, where appropriate, to pool their collective strengths.

Biden’s reason for skipping both the Pacific Islands Forum leaders’ meeting in PNG and the Quad summit in Sydney are well understood: the US domestic debt crisis took priority. But it has reminded the Pacific island countries—and Australia and New Zealand—that, despite its protestations, the US has yet to prove that it is a reliable and consistent partner to the Pacific. It should also serve as a reminder to Australia, New Zealand and the US that the time and opportunities they have to build trust and demonstrate their reliability to their Pacific partners are not limitless.

What the defence strategic review got right—and got wrong

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The central guidance in the defence strategic review is the introduction of the concept of deterrence by denial. I and my co-author Richard Brabin-Smith argued for acceptance of this concept in May 2021 in an ASPI publication titled Deterrence through denial: a strategy for an era of reduced warning time. We maintained that deterrence was more likely to work if Australia had a more certain ability to deny an attacker its military objectives. Solid deterrence provides a hedge against surprise, raises the cost to an adversary of action against our interests and, if sufficient, makes an enemy’s attack irrational.

The bottom line for defence policy is that, as confidence in deterrence by denial goes up, our dependence on early response to warning should go down. Moreover, it would be easier and cheaper to go to a higher state of alert with this concept than with one based on deterrence through punishment, which implies attacking the adversary’s territory.

The review appears to accept this and focuses on deterring a potential adversary with long-range missiles in our area of primary strategic concern, which it defines as encompassing the northeastern Indian Ocean through maritime Southeast Asia into the Pacific, including our northern approaches. Of course, were an adversary to gain access to a military base in a place such as the Solomon Islands or Vanuatu, we would have to contemplate a threat to our heavily populated eastern approaches. We simply cannot revert to a defence force that can only defend Australia and our immediate region.

Some issues in the publicly released version of the review didn’t receive sufficient explanation. For example, why didn’t it make a recommendation about whether we should go ahead with the $50 billion Hunter-class frigate program rather than pass the parcel to yet another independent analysis? And why was the army’s bid for new Abrams tanks not cancelled?

The review says the defence organisation is facing significant workforce challenges (which Defence Minister Richard Marles acknowledges) and that’s a recurring theme across the Australian Defence Force, the defence public service and defence industry. This is an acute issue for Defence. Also, the growth in star rank levels (brigadier equivalent and above) has been astonishing over the past two decades—June 2022 figures are navy, 58; army, 86; air force, 61; and defence public service, 156. The review’s recommendation for a comprehensive review recommended of the ADF reserves, including consideration of the reintroduction of a ready reserve scheme, is a good idea.

Another important workforce issue is not mentioned. Under what conditions would we need to mobilise not only the ADF and its supporting public service, including the intelligence community, and how would nationwide mobilisation work in a real security crisis when there would be mutual competition for key staff between military, civilian, defence industry and reserve forces? The review has a chapter on force posture and preparedness, but it doesn’t address the issue of mobilisation at all, even though it’s in the terms of reference and the defence organisation has been working on such an analysis for several months.

The review strongly criticises the Defence Department’s Capability Acquisition and Sustainment Group, saying its approach to capability acquisition is not fit for purpose and ‘the system needs to abandon its pursuit of the perfect solution or process and focus on delivering timely and relevant capability’. It says Defence’s acquisition process is not suitable given Australia’s strategic circumstances and there’s a clear need for a more efficient process. The volume and complexity of projects is overwhelming Defence’s capability system, its limited workforce and its resource base, resulting in delays and ‘strategically significant capability outcomes not being achieved in a timely manner, or at all’.

The review recommended that Defence, ‘where possible, acquire more platforms and capabilities via sole-source or off-the-shelf procurement, and limit or eliminate design changes and modifications’. The review team said it had seen ‘evidence of contractors managing contractors through several layers of a project’s governance structure with inadequate Commonwealth oversight’. It stressed that mechanisms to manage risk in acquisitions ‘do not serve us well in the current strategic environment’ because they’re ‘burdensome and misguidedly risk averse’.

The review concluded that options should be developed as soon as possible to change Defence’s acquisition system ‘so that it meets requirements and is reflective of our current strategic circumstances’. But it doesn’t address the National Audit Office’s demands for suitable checks and balances on the process.

So, the review marks a significant break from most of Australia’s defence policies in the past 50 years and recognises the serious deterioration in our strategic circumstances. While reinforcing many of the changes set out in the 2020 defence strategic update, it also proposes important new directions for the ADF’s structure and posture. Because the public version omits sensitive material, some of its recommendations are more implied than explicit.

In some respects, it’s a pity that the review dropped the expression ‘defence of Australia’, for there remains much continuity in the new era with the earlier policies. The key change is that the notion of the ‘core force and expansion base’ is no longer valid. Instead, the central idea for today’s circumstances, when extended warning time no longer applies, is the need for a contingency force with a surge capacity. The review goes a long way towards recognising that, although its lack of discussion of mobilisation is a weakness.

Under the old policy regime, Australia was able to get away with a small peacetime defence force, at peacetime levels of preparedness, capable of little more than routine peacetime operations and training, supported by peacetime intelligence and policy communities and a peacetime industry base. Clearly, this is no longer appropriate.

The review indicates that readiness and sustainability are now major concerns, saying in effect that a platform without a crew or weapons is a waste of time and money. Its call for an increase in aircrew numbers is a serious indictment of current Defence culture. The review doesn’t indicate the costs involved but implies they’ll prove significant.

The review gives welcome support for the acquisition of uncrewed platforms (submarines and the Ghost Bat autonomous aircraft are mentioned) and for a program to build highly capable precision guided weapons in Australia. This will enable us to move quickly to implement deterrence by denial, especially through long-range precision missiles. And it offers a more convincing mode for timely force expansion than the previous, largely implicit assumption that force expansion would be through the acquisition of additional, complex and costly major platforms. It’s perhaps significant that the review doesn’t propose acquiring further major platforms beyond those already planned, although the recommended independent analysis of the Navy’s surface fleet could well propose such changes.

In many respects, the army will undergo the most significant change, entailing a refocusing of priorities. Why hadn’t Defence itself realised that the direction in which the army was moving wasn’t well matched to Australia’s emerging strategic circumstances? There’s an echo here of the factors that led to the need for the 1986 Review of Australia’s defence capabilities: issues even then concerning planning priorities for the army had been much more contentious than those for the navy or the air force, and they had been left unaddressed.

Nevertheless, the new and rearticulated responsibilities for the army will increase its importance and relevance. Land-based long-range anti-ship missiles will have a vital part to play in deterrence by denial. Handling the technological complexities of precision targeting will be made easier by the transition to the review’s culture of an integrated force. It will be important for army’s anti-ship missile units to be well supported by the navy and other defence elements. And the strengthened focus on littoral operations is clearly relevant to Australian priorities. It’s important that the limits to what is intended are spelled out, because if it’s taken to the extremes the resource demands would be unrealistic, and the priority doubtful.

Explicit in earlier policies was the expectation that intelligence analysis would warn that Australia’s strategic environment was deteriorating, and that government would act on that advice. We have been concerned for some years that the machinery of government was slow to recognise strategic change and even slower to act. The review reinforces this concern. Throughout, for example, it emphasises the need for urgency. And there are many other examples of its concerns about out-dated policies and priorities for resources.

These are issues of governance, not necessarily only within the Department of Defence. The review emphasises the importance of taking an integrated, whole-of-government approach to national defence—as in the review’s title. We are entitled to ask what’s been going on for this statement of the obvious to require such prominence.

Looking at past governance issues is useful because it’s important not to repeat past mistakes. But concerns go beyond this. The most recent review of the Australian intelligence community was in 2017, well before today’s security perspectives developed. It would be timely to be reassured that our intelligence community is well placed to meet today’s demands, including through having a surge capacity to deal with 24/7 contingencies.

For Defence, there’s no unique approach to governance, and practice has tended to reflect the issues and priorities of the day, going back to the reforms of the early 1970s under Defence Minister Arthur Tange. The most recent examination was the first principles review conducted in 2015, long before today’s strategic anxieties developed. These observations, together with the review’s telling criticisms of current practice and explanation of the difficulties that lie ahead in implementing its recommendations, reinforce the need for a thorough examination of governance, both within Defence and within the machinery of government more generally, to ensure that it’s fit for purpose in today’s changed circumstances.

The review is a major step along the road of much-needed reform and the key will be in implementing its findings. The government must avoid past failures of not following through on the program.

And as always there’s finding the money. Defence will have to ruthlessly weed out lower priority proposals. It is reassuring that Prime Minister Anthony Albanese, when launching the review, acknowledged that increased defence spending would be required beyond the forward estimates. We must hope he keeps his word. History tells us that too often Defence has been a convenient milch cow when there are strong budgetary pressures elsewhere.

(A version of this article has appeared in The Australian.)

Securing the critical minerals that America and its allies lack

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Critical minerals are the bedrock of the global economy, and they are crucial to the advanced capabilities relied on by the world’s top militaries. Metals like copper, nickel and cobalt are ubiquitous in the mechanised world, in everything from aircraft engines and electrical wiring to industrial machinery and electric vehicles. Yet reserves of minerals, and the places where they’re processed, are unevenly concentrated globally.

Given their necessity in the global economy and in the military balance of power, the US must adopt an expanded strategy for securing critical minerals. Complicating this matter, possible sources of critical minerals are in high-risk countries and are mined by non-American companies, often from China.

Indonesia produces 48% of the world’s nickel ore and Chinese companies are expanding their nickel dominance there, investing more than US$14 billion in projects over the past 10 years. Russia produces 17% of the world’s class 1 nickel, which is necessary for electric vehicle batteries, and China produces 20%.

The US holds only 0.4% (370,000 tonnes) of global nickel reserves, and it produces a mere 0.5% (18,000 tonnes) of the world’s nickel ore. The sole nickel-producing mine in the US—Eagle Mine in Michigan—ships its ore overseas for refining and is slated to close in 2025.

Annual US nickel consumption is around 80,000 tonnes, so even if it refined all of its ore production it would still need to import nickel. And even if the US mined all of its nickel reserves, at current reserve levels it would only have enough to last 4.6 years.

The US lacks enough of other critical minerals (such as gallium, graphite, yttrium, bismuth and rare earths) to be self-sufficient and must import them. But its allies also don’t have enough reserves, or don’t mine enough, to meet US demand. The US Geological Survey says China produces 70% of the world’s rare-earth ore, while the US and its allies produce 23%.

The US should be able to rely on its own product and that of its allies to satisfy its demand. But the allies producing rare earths often use them domestically or ship them to China for refining, limiting US access. Australian rare-earths miner VHM Limited, for example, will sell 60% of its output to Chinese rare-earth giant Shenghe.

To secure adequate minerals for its economy and military while it develops domestic production, the US must adopt a critical minerals strategy beyond ‘onshoring’ and ‘ally-shoring’. The government should support American companies financially to help them secure supply agreements with trusted companies, acquire existing overseas mines, and develop new mines overseas. Given the scarcity of experienced, well-capitalised US mining companies, major and junior companies from Canada and Australia should be eligible partners with US firms in this strategy.

A first step would be for the US government to establish a list of companies from which American companies could source minerals—as in manufacturers of rare-earth magnets purchasing oxides from Australian company Lynas’s facility in Malaysia.

Buying existing mines has the advantage that they have proven production, and Canadian and Australian mining companies are already doing this. Australian company Rio Tinto recently secured direct control of Mongolia’s Oyu Tolgoi copper and gold mine. To further reduce supply risk and strengthen economic partnerships, the US government can work with the host country government to identify mines for acquisition, help finance the purchase by US companies, and establish processes to resolve any disputes.

Developing mines costs billions of dollars up front, and securing that capital at reasonable rates, especially for projects in high-risk countries, is difficult. The US government could provide cheap capital for US companies to develop such mines. US companies could partner with Canadian and Australian companies seeking to develop overseas mines, such as BHP, which has invested $40 million in Tanzania’s Kabanga Nickel project.

A US company could identify a project and seek the US government’s financial support and help in negotiating with the host country to secure the mining concessions.