Tag Archive for: Donald Trump

Some US allies contribute, some loaf. Here’s a numerical assessment

Which US allies have paid their bills, as President Donald Trump would see things? Which, having given the United States little support in return for its security guarantee, now risk losing it?

The short answer, derived from our numerical methodology, is that only nine countries in the US’s main European and Indo-Pacific alliance networks are genuine net contributors to their partnerships with Washington. Australia, Britain and the Netherlands rank highest. Poland, Norway and France are also pulling their weight.

Sixteen countries in those alliances, though not quite free-riders, can fairly be called cheap-riders, according to our assessment, which measures allies’ commitments of blood and treasure. Another 12 may be classified as blatant cheap-riders, notably including Japan, which has the largest economy among the US’s friends.

Our assessment does not focus on Washington’s Latin American and Caribbean allies, but, if it did, they’d all be classed as cheap-riders or blatant cheap-riders.

With Trump taking the unprecedented step of linking protection with payment, our analysis aims to clarify allies’ risks of US abandonment. For the NATO and Indo-Pacific allies, this is no mere academic exercise. European NATO members face an aggressive Russia that has threatened to expand its war against Ukraine. And US allies in the Indo-Pacific confront an increasingly assertive and powerful Beijing, alongside growing nuclear and missile threats from Pyongyang.

Contrary to expectations, we found that proximity to these threats did not necessarily correlate with higher contribution to the US alliance, especially in Europe.

Within alliances that are asymmetric, as any with the US must be, weaker partners cannot fully compensate the stronger partner for protection. They’re not rich enough. But they can contribute (or, in Trump’s parlance, ‘pay’) through such actions as providing international diplomatic support, forward bases or niche military capabilities.

Trump generally attaches greater weight to more readily quantifiable measures, such as defence spending as a percentage of GDP. So we follow him, answering the bottom-line question ‘Who’s paid?’ by asking five component questions with readily quantifiable insights. We aggregate the results into an overall payment score.

First, has the ally met its defence spending targets over the lifetime of the alliance? Washington expects allies to spend at least 2 percent of GDP on defence (though Trump has floated higher standards). By doing so, allies develop properly funded independent military capabilities, reducing the US’s burden of guaranteeing their security. Higher spending also makes them more useful potential partners in US-led coalitions operating outside the alliance areas. Consistently meeting the 2 percent target, amid constant pressures on the public purse, also demonstrates a domestic political resolve that enhances the alliance’s deterrent potential. So we assess lifetime spending by comparing each ally’s total defence expenditure and GDP during its time in alliance with the US. Net contributors meet the 2 percent threshold, whereas net cheap-riders fall short.

Second, has the ally met its defence spending targets over the past decade? Military capabilities, accrued over time, atrophy without sufficient ongoing funding. Washington, for example, built a world-class navy in the American Civil War—which, after years of underinvestment, amounted to just ‘an alphabet of floating washtubs’. Correspondingly, recent defence spending provides insight into which allies have maintained the military capability and preparedness that Washington values. And, again, it shows political resolve. We assess recent spending by considering allies’ defence expenditures and GDPs since 2015 (when combat operations in the last US-led ground-war ended and when Trump’s full engagement in politics began). Net contributors meet the 2 percent threshold, whereas those falling short have either been persistent cheap-riders or, having formerly paid their dues, have now decided to take it easy.

Third, how much US weaponry has the ally purchased? Allied acquisitions of US military equipment, such as aircraft, give Washington several benefits: revenue from and longer production runs of existing systems (for example, F-16s); more work from their maintenance programs; savings from cooperative development of new systems (such as the F-35); and improved US and allied fighting strength thanks to the ease of operating common equipment. We assess weapons purchases by considering allies’ relative shares of US arms transfers and global GDP during their alliance tenure. Scores under 1 indicate comparatively limited purchases, whereas those exceeding 1 denote outsized purchases, and those above 2 show purchases that greatly favour US suppliers.

Fourth, has the ally supported US-led combat coalitions? Allied participation in military operations benefits Washington by providing international legitimation for the action and reducing the burden on the US. Alliances, however, are not wellsprings of guaranteed support: as self-interested actors, allies can decline to render aid or even defect to opposing blocs. Correspondingly, joining US-led coalitions builds good faith with Washington (and implicitly serves as down payment on reciprocal assistance). We assess participation by considering five ground-war coalitions (those for the wars in Korea, Vietnam, Persian Gulf, Afghanistan and Iraq) and five primarily air-war coalitions (in the Iraqi No-Fly Zones and campaigns in Bosnia, Kosovo and Libya and against ISIS). We allocate points according to the burden undertaken: for ground-wars, 8 points for providing frontline combat forces, 4 for supporting units, and 2 for financial assistance. For air wars (which involve less cost and risk), point values are halved. We count allies as consistently supportive if their points exceed 17 points and as reliable combat partners if they exceed 30.

Fifth, has the ally paid a blood price? Allied personnel losses, incurred while furthering Washington’s security interests, represent a shared sacrifice, one that demonstrates the highest form of loyalty (a value cherished by Trump) and implicitly serve as further down payment on reciprocal assistance. Since US-led air wars have featured minimal casualties, we assess losses by counting the number of US-led ground wars after World War II in which allies have suffered service deaths.

We generate overall payment scores by aggregating allies’ performances across all five measures. Each measure receives a 20 percent weighting, and we grant maximum points for:

—Meeting the 2 percent defence expenditure target during the period of alliance;

—Meeting it in the past 10 years;

—Greatly favouring the US in weapons purchases;

—Providing frontline combat forces for each US-led combat coalition; and

—Incurring personnel losses in each US-led coalition ground war.

Partial points are awarded relative to these maximums. Scores below 50 indicate blatant cheap-riding. Those exceeding 70 denote genuine net contributors—for example, 40 for meeting both spending targets, 20 for joining and suffering losses in more US-led coalitions than not, and 10 for outsized weapons purchases.

So, who’s paid?

The US alliance network contains few genuine net contributors, with only nine of 38 NATO and Indo-Pacific allies exceeding 70 points. Moreover, three net contributors deserve qualification: Greece and Turkey generally prioritise each other as a threat rather than NATO’s common adversary, Russia, and South Korea owes the US for its ongoing protection along with its defence during the Korean War.

The Indo-Pacific allies contribute relatively more than their NATO counterparts, averaging higher overall and component scores (apart from participation in operations, among which were three NATO-centric air-war coalitions). Compared with NATO, the Indo-Pacific alliance network also includes a greater percentage of genuine net contributors (28 percent versus 22 percent) and a much lower percentage of blatant cheap-riders (14 percent versus 35 percent).

Notable cheap-riders include Germany and Japan, because they have large economies and therefore great potential military might.

It’s also remarkable that cheap-riding is common in the countries of NATO’s Eastern European expansion. Apart from Poland, Romania and the Baltics, all are blatant cheap-riders, even though their membership has brought added burdens and risks to the alliance, including the US.

Australia is well insulated against Trump’s potential revisions to US alliance policy, which largely (and, in light of our findings, rightly) concentrate on redressing NATO’s relative underpayment. Canberra is immune to similar charges: no other ally has given Washington comparatively more blood and treasure than Australia, and the Albanese government has already begun reversing recent dips in defence spending, pledging to spend 2.3 percent of GDP by 2034. Moreover, Australia’s ‘indispensable’ strategic partnerships with other US allies remain relatively safe: Britain ranks second in terms of its alliance contributions (which bodes well for AUKUS solvency), and Japan, though a definite laggard, has been steadily boosting what Trump would see as its payments. It’s greatly lifting defence spending, increasing host-nation financial support and reinterpreting its constitution to permit collective military action.

How, or whether, Canberra’s unrivalled contributions will affect its bargaining position with Washington remains to be seen and needs supplementing with qualitive analyses (as given here for the first Trump presidency).

Europe is only as weak as it thinks it is

Europe has just held a rapid-fire series of high-profile summits. Following the Paris AI Action Summit and the Munich Security Conference, European leaders gathered for two emergency meetings in Paris to address the disturbing signals coming from the new administration in the United States. In each case, a central question was how Europe can catch up with the US and China technologically and militarily.

By now, it is obvious to everyone that US President Donald Trump’s administration intends to treat Europe with contempt, and that Europeans must take responsibility for their defence and security fully into their own hands. The US is not only sidelining European governments to negotiate an end to the war in Ukraine; it has also thrown its support behind European far-right parties and accused European liberals and democrats of betraying Western values.

Is there a method to this madness? Could the overture to Russia be an attempt to repeat president Richard Nixon’s strategy of breaking the alliance between communist China and the Soviet Union? We know that Trump is obsessed with China, and that Russians themselves have good reason to fear Chinese dominance. If sacrificing some part of Ukraine would allow Trump to strike a blow against his bete noire, he would surely seize the opportunity.

But this Nixonian manoeuvre is unlikely to succeed unless Trump secures Europe’s participation, and that seems unlikely. Paralysed by fear since Russia’s full-scale invasion of Ukraine in early 2022, Europe has forgotten that it can say no. But the Trump administration has shaken European leaders from their slumber. They are now taking an inventory of their strengths and exploring their options. Ukraine is not up against a wall yet. With increased support from Europe, its battle-hardened, highly innovative military can continue to resist Russia’s aggression.

Moreover, the Trump administration has not done much of anything yet except talk. Its real focus is on the home front, where it is busy gutting its own state capacity by mass firings. Trump’s war on the civil service—presumably the prelude to installing a skeleton crew of political loyalists—will inevitably cost the US money and reduce his ability to carry out his policy agenda.

The European Union, for its part, should not respond with the usual search for unity. Given the parties in power in Hungary, Slovakia and elsewhere, that is neither possible nor necessary. The better strategy is to build a coalition of willing EU member states and other countries that Trump is pointlessly alienating, such as Canada, Britain and South Korea.

This seems to be what French President Emmanuel Macron has in mind, judging by his recent statements. Many of his past warnings are now coming true. He remains one of the only leaders, alongside British Prime Minister Keir Starmer, who is not ruling out sending troops to Ukraine or the surrounding area. And lest we forget, France and Britain both have nuclear weapons.

Lost in the coverage following the rupture with the US is the fact that Western Europe is more fearful than Eastern Europe. We are arguably more familiar with crises, but we also are not the ones in Trump’s crosshairs. We do not have a huge trade surplus with the US, and we spend hundreds of billions of dollars on US-made weapons. Unlike the Netherlands (ironically the home of NATO’s new secretary-general), which spent around 1.7 percent of its GDP on defence in 2023, Poland spends almost 5 percent.

Judging by the flurry of recent speeches and statements from Republican officials, one might think that there are actually two Republican parties. On one hand, there is the old party that always sought to raise defence spending, strengthen US military alliances, and confront autocrats such as Russian President Vladimir Putin. On the other hand, there is the party of Trump’s MAGA movement, which seems to believe that national greatness requires dismantling the US state and abandoning longstanding alliances, all justified with primitive blood-and-soil rhetoric and conspiracy theories.

While it feels as if the entire world has changed overnight, the truth is that nothing really has happened yet. If Europeans would only open their eyes, they would see that they have all the resources, talent, and instruments they need to secure their sovereignty and restore peace and stability. They do not need an invitation to the table. They should take inspiration from Ukraine, which has single-handedly halted Russia’s march of aggression through sheer willpower.

This is no time for Europeans to panic. On the contrary, Trump has given us what we need the most: a reason to get our act together.

Trump’s turbulence shifts Australia’s focus to Europe

The SS United States is the largest American ocean liner to be entirely built at home.  To this day, it holds the speed record for crossing the Atlantic Ocean, which it set on its 1952 maiden voyage thanks to its military-grade propulsion.

Informed by a wartime need to move soldiers and materiel to Europe, the luxury liner had been designed to be readily convertible to a troopship that could swiftly deliver a 14,000-strong US Army division anywhere in the world. 

Despite decades of rust and decay, the beauty and power of the now 75-year-old vessel was evident when I had a private tour of United States in Philadelphia some years ago. Once emblematic of US primacy and trans-Atlantic ties, the ship is soon to be an artificial reef off Florida. Its fate and destination—in the re-named ‘Gulf of America’—is a depressingly apt metaphor for what America is becoming. 

The domestic whirlwind sweeping the US is echoed in its foreign policy, with serious implications for Australia’s strategic interests.  President Trump not only has renamed a map feature, he also is opening a gulf between the US and its long-time partners and allies—and Moscow and Beijing are strategic beneficiaries. 

While Australia rightly will remain committed to the Alliance which has underpinned our national security for decades, we must recognise that other countries that share our principled strategic goals will become more important to our national and regional security. 

Regional partnerships remain critical, but European nations—with their own experience of an autocratic neighbour—can help buffer our region against Trumpian caprice and resist growing pressure from a would-be hegemon, China. 

In his first term, Trump’s goading and confrontational bluster was fuelled by his unquenchable thirst for publicity. This time, it is more visceral, informed by conviction (in more than one sense of the word), and underpinned by determined malice and vindictiveness. 

This has been especially evident in his disdain for Ukrainian sovereignty, his dismissive attitude and threats towards NATO and Europe, and his solicitous courting of Russia’s president, Vladimir Putin. 

Barely a month in office, Trump has shifted the strategic balance more decisively in Russia’s favour than the Kremlin had been able to since Putin started his full-fledged, illegal and unjustifiable war of choice against Ukraine in February 2022. Trump deludes himself about the real aggressor, denigrating Ukraine’s President Volodymyr Zelenskyy while trying to monetise Ukraine’s existential war and extort an arms-for-minerals deal in a shakedown that would make Don Corleone blush. 

It is shameful that one democracy should be willing thus to abandon another to the predations of an autocracy. 

We are yet to see any strategic quid pro quo for Trump’s unilateral turn towards the Kremlin. His innately mercurial approach and pathological need to ‘win’ yet may disappoint Moscow, but Europe will scramble in the short term to compensate for any abrupt diminution in US commitment to trans-Atlantic security. Decisive leadership and vision will be vital, but the recent German election results underscore that this is not a given. 

In Who Will Defend Europe? Keir Giles, one of Britain’s leading Russia analysts, examines the self-imposed constraints that prevented the EU and NATO from adjusting fast enough to the end of the post-post-Cold War era and the return of strategic competition. At the core was Europe’s lack of military-industrial readiness and political resolve to confront a revanchist Russia. Those shortcomings must now be reddressed with long-overdue urgency. 

Giles usefully illuminates the wider malaise afflicting other nations grappling with the new world disorder and revisionist risk-takers who see strategic gain in near-term opportunism and confrontation. His arguments underscore an important consideration for Australia in coping with the turbulence and disruption emanating from Washington. 

Australia will need to maintain its natural focus on our Indo-Pacific region, but we will benefit at the same time from deeper collaboration with European counterparts in building national resilience here and elsewhere. By pooling our respective experience of autocratic efforts to subvert domestic cohesion and undermine trust in our democratic institutions, we will be better able jointly to contend with what’s become known as the Axis of Upheaval.

We can learn from the forthright approach of NATO’s newest members, Sweden and Finland.  Both use the concept of ‘total defence’, in which aspects of national strength, including social resilience and economic power, contribute to the defence of the nation, and from the honesty with which their governments articulate the challenges their societies face. 

Though varied in size and heft, Norway and the Baltic nations (Estonia, Latvia and Lithuania) have deeply relevant and valuable experience as frontline states that share not just a continent but a common border with an imperially-minded power whose strategic goals are misaligned with those of democracies that trust in, and rely on, the international rule of law for their security and prosperity rather than the application of military force. 

Poland is also a valuable exemplar.  Like Estonia and Sweden, it has been pushing back against disinformation for years.  It recently put one of its most seasoned diplomats in charge of countering subversion and is also hosting a multinational Communications Group to better co-ordinate efforts at debunking misleading Russian narratives. 

As the SS United States began its final voyage, Susan Gibbs, the grand-daughter of the ship’s designer observed: ‘The ship will forever symbolize our nation’s strength, innovation, and resilience.’  While we must hope that these qualities will endure in the Alliance, we would be prudent to cultivate them more assiduously in our relations with Europe. 

What if the US leaves the IMF and the World Bank?

After withdrawing the United States from the Paris climate agreement and the World Health Organization, President Donald Trump may pull the country out of more international institutions in the coming months. Notably, Project 2025—the blueprint for his second presidency, developed by the conservative Heritage Foundation—calls for the US to exit the International Monetary Fund and the World Bank. Rather than acceding to Trump’s demands, member countries should recognise that a US withdrawal would primarily harm the US and use that to negotiate on their own terms.

On February 4, Trump ordered a sweeping 180-day review of all international organisations to which the US belongs and supports, as well as ‘all conventions and treaties to which the United States is a party.’ The directive aligns with the goals of Project 2025, which dismisses the IMF and World Bank as ‘expensive middlemen’ that ‘intercept’ US funding before they reach projects abroad. If Trump follows this playbook, a US exit would be imminent.

But Project 2025’s authors have clearly misunderstood how these institutions are funded and run. By abandoning the IMF and the World Bank, the US would lose a key source of global influence and economic leverage. In effect, the US would forfeit vital tools for supporting its partners—and withholding financing from its foes.

The proximity of the IMF and World Bank headquarters to the US State Department, Treasury and Congress is no coincidence. The US has consistently maintained tight control over these institutions, shaping their policies and leadership to advance its national interests. The US has always appointed the World Bank’s president, approved Europe’s choice to lead the IMF, and selected the fund’s deputy managing director. It remains the only member country with the power to block major decisions unilaterally, as both the IMF and World Bank require an 85 percent majority.

Unsurprisingly, studies have repeatedly shown that the IMF and World Bank’s lending patterns closely align with US national interests. The US regularly uses the IMF as a ‘first responder’ to protect the US economy. Trump knows this. In his first term, it enabled him to provide his longtime friend, the then-President of Argentina Mauricio Macri, with a US$57 billion IMF program—the largest of its kind in the fund’s history (paid for by all the members of the IMF). Similarly, the US has used the World Bank to bolster security and economic alliances, address terrorism threats and support the postwar reconstruction of countries such as Iraq and Afghanistan following US-led invasions.

Perhaps most importantly, the actual cost of US participation in the IMF and World Bank is far lower than many assume. Every year, the Treasury Department evaluates the financial impact of the country’s contributions to the IMF. In the 2023 fiscal year, it reported an unrealized gain of US$407 million.

The World Bank offers similar opportunities to use US resources. The main arm of the World Bank Group, which has four other subsidiaries, is the International Bank for Reconstruction and Development (IBRD). The cost of running the bank is not paid by the US but by major borrower countries such as India, Turkey, Indonesia, Argentina and the Philippines. Their loan repayments, along with the IBRD’s net income from previous years, largely fund the organisation’s headquarters, staff salaries and other operational expenses (most of which flow directly into the economy of Washington, DC).

Unlike many multilateral institutions, the IBRD does not rely on direct country donations. Instead, it raises capital by issuing bonds and then lends the proceeds to developing and emerging economies. In effect, the IBRD finances itself—issuing US$52.4 billion in bonds in 2024. Although its bonds are backed by guarantees from member countries, the IBRD has never tapped its callable capital. Consequently, each shareholder provides a small portion of its committed share as ‘paid-in capital’. For the US, that amounts to US$3.7 billion—about 19 percent of the US$20 billion in subsidies the federal government has given Elon Musk’s SpaceX over the past 15 years.

To be sure, the US contributes to the World Bank in other ways. In 2018, for example, Trump’s first administration approved a US$7.5 billion capital increase for the IBRD. This does not demand more financial contributions from the US. But the US gets much in return. For example, its contributions to the World Bank’s concessional lending arm, the International Development Association, are voluntary and renegotiated every three years, giving the US enormous influence over the association’s lending.

Simply put, withdrawing from the IMF and the World Bank would be a grave mistake, stripping the US of its ability to shape the rules of the international monetary order and pursue its strategic interests. Yet at least some in the Trump administration appear tempted.

Even if the US does not withdraw from the World Bank and instead withholds its funding, member countries representing 70 percent of the total voting power could suspend its voting rights for failing to meet its financial obligations. The US would then lose all rights under the Bank’s Articles of Agreement—except the right to withdraw—while still being bound by its existing commitments. If the suspension lasts more than a year, the US will automatically lose its membership unless the same majority votes to reinstate it.

US President Theodore Roosevelt famously said foreign policy should ‘speak softly and carry a big stick.’ The Trump administration believes in speaking loudly and letting Musk use his big stick to smash things. Other countries may be shocked, but they are not helpless. By staying focused, working together, and acting decisively, they can still salvage the multilateral system.

Tackling climate change in the age of Trump

There is no denying the reality of global warming. Each year is hotter than the preceding one. Last month alone was the hottest January on record. Recurring natural disasters—floods, fires, droughts and hurricanes—are becoming more extreme and frequent. The world has blown through the goal of limiting warming to 1.5 degrees C above the pre-industrial level. At this rate, climate change could define the second half of this century.

National and international efforts to stem climate change are not succeeding. The Global South views the problem as one that ought to be fixed by richer countries that developed sooner. Many countries, including China, prioritise near-term economic growth over reducing greenhouse-gas emissions, and freeriding on other governments’ efforts is widespread, partly owing to public opposition to taxes that could curb energy use or encourage climate-conscious behaviours.

Since returning to the White House, Donald Trump has led the United States swiftly into this camp, withdrawing from the Paris climate agreement, rescinding emissions-reduction targets and ending climate-related initiatives. His administration is focussed on increasing fossil-fuel production, even though the US is already the world’s leading producer of oil and gas and has only modest potential to increase output.

The reasons are not only economic but also cultural and political, with many Americans resenting or rejecting experts’ climate warnings. The good news, though, is that a range of potential initiatives that are consistent with the Trump administration’s priorities could still slow climate change.

Those who acknowledge the seriousness of the climate crisis can repeat the same arguments, attend the same global conferences and advocate for the same policies in the hope that at some point what has mostly failed will mostly succeed. But they would be better off trying a different approach, one that reflects political realities in the US and around the world but could still make a meaningful difference.

Such an approach must begin with realistic goals. Climate change can be managed, not stopped or solved. Global emissions continue to rise, fossil fuels still account for 80 percent of world energy use and talk of a transition away from them is mostly just that: talk. And energy use will only continue to increase as the global population increases, Africa develops, electrification expands and new data centres required for artificial intelligence are built.

Given this, embracing energy coexistence is unavoidable. Fossil fuels will be here for decades to come. While developed countries are abandoning coal (albeit not completely), its use in the developing world continues to increase, where the goal should be to accelerate the shift toward cleaner natural gas. The same holds for practices that limit methane emissions. Renewables are growing in importance and should be encouraged through public-private partnerships. There is no reason that a US president prepared to be tough on China should allow it to dominate green technological innovation. The private sector, which has made enormous investments and stands to gain from future ones, should weigh in.

Policymakers should also emphasise adaptation and resilience at the national, state and local levels. Building codes and zoning regulations need to be rethought to limit vulnerability to climate-related extreme heat, fires, storms and flooding. Investment in such infrastructure could create jobs and make it possible for people to live where they want. Solutions that increase the efficiency of the energy grid, water systems and household appliances should also be adopted. Here, Elon Musk’s Department of Government Efficiency (DOGE) should weigh in.

Likewise, a feasible climate-change policy must treat nuclear energy as indispensable for achieving reliable clean power. This can only happen by streamlining permitting processes to accelerate deployment of new reactors. China is building nuclear plants in under five years; there is no good reason the US cannot match this. Similarly, roadblocks to much needed renewable projects, mining of critical minerals and development of energy infrastructure ought to be reduced. Here, too, DOGE could have a role to play.

The federal government and states (together with companies) should also invest in technologies such as direct air capture, better scrubbing systems for coal plants and carbon capture, utilisation, sequestration and storage. Again, there is no reason that economic growth must be sacrificed.

A greater focus on what communities and cities can do to reduce their vulnerability to fires, floods and the like can help manage the effects of climate change without engaging the ideological debate. It would also help to engage new climate allies, including religious leaders, educators and business leaders. Many young people are already there.

At the same time, global efforts should be restructured. The annual United Nations climate change conferences are falling short. What is needed are smaller groups (what some call minilateralism) focussing on specific aspects of the climate challenge and involving the governments and companies that matter most. Trade offers a model here: whereas global efforts have failed, regional and other small clusters have flourished.

Nature-based climate stewardship of the oceans and forests is also needed, because it preserves and expands the most powerful carbon sinks. Assistance of all sorts should be channelled to encourage forestation and halt or slow deforestation. Trump considers himself an environmentalist. Here is a way he can act on it.

Lastly, solar geoengineering, or reflecting solar radiation back into space, deserves more exploration. Federal investment through US national labs could ensure responsible development and governance. While controversial, it represents the kind of bold, game-changing initiative that should appeal to Trump. If successful, solar geoengineering could one day meaningfully slow or stop additional climate change and even offset some existing effects. And even if its promise proves to be less dramatic, the technology could complement existing and planned mitigation and adaptation efforts.

There are no doubt other ideas that are both desirable and feasible. What is certain is that we cannot address the climate crisis effectively by insisting on an approach that is not succeeding. Stopping climate change might well be beyond our reach, but managing it in a cost-effective way need not be.

Securing Australia’s interests in a Trumpian trade world

Australia must adopt a sophisticated and multi-layered strategy to engage the second Trump administration on trade and security. Australia must frame its trade relationship with the US in terms of its direct contribution to US national security and job creation.

Donald Trump’s second presidency, not yet 100 days old, is already sending shockwaves across the global trade. Australia’s economic and national security and the future of Indo-Pacific security architecture depend on navigating an unpredictable trade landscape. Understanding the new administration’s trade policies and their link to broader security considerations is essential for Australia’s economic prosperity and broader national interests.

The previous Trump administration made clear its perception that many countries were taking advantage of the United States. This concern became a guiding strategic principle, extending beyond trade imbalances to encompass security burden-sharing. Australia has long been a good trade and security partner to the US, and it navigated the first Trump administration with aplomb. While our trade surplus played a role, it was not the decisive factor.

Two elements underpinned Australia’s success. First was Australia’s commitment to defence spending, as evidenced by the 2016 Defence White Paper and its pledge to meet a target of 2 percent of GDP. Second was Australia’s increasingly assertive stance towards China, even at the risk of short-term economic pain. Willingness to prioritise security over immediate economic gain earned Australia considerable respect within the administration.

Australia’s current strategic settings may fall short of the Trump administration’s expectations. While the AUKUS partnership bolsters Australia’s defence credentials, a closer examination of defence spending beyond this high-profile initiative reveals vulnerabilities. Moreover, there is a perception that Australia’s China policy has softened, potentially undermining its standing with the new administration.

Assuring the administration of Australia’s support for the US’s national security and economy requires highlighting sectors where US-Australia economic cooperation directly enhances US defence capabilities. In addition to Australia’s $3 billion investment in expansion of US shipyards, Australian industry and manufacturing has been deeply embedded in the US defence supply chain for many decades.

For instance, as part of a memorandum of understanding with the US, Australia has long supplied parts for F-35 fighters assembled in Texas and bought by Australia. Australian defence firms collaborate with US contractors, providing important components and technology for submarines, warships and cybersecurity solutions. Australia and the US are also deepening critical-minerals cooperation for US military and aerospace applications, including cobalt and lithium for defence-related battery technologies.

This framing must extend beyond specific sectors to encompass the broader alignment between the two countries. Australia’s unwavering commitment to a free and open Indo-Pacific, its willingness to confront Chinese assertiveness and its active participation in regional security initiatives, such as the Quad, contribute to a secure and stable environment conducive to US interests.

While the US may favour bilateral trade arrangements and a tiered system prioritising democratic economies, Australia must continue championing the existing rules-based international trading system. Australia is the 2025 chair of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership Commission, whose member states accounts for about 14 percent of global GDP. Canberra thereby has a unique opportunity to coordinate action on US tariffs in the group and reaffirm member states’ commitment to free and open trade. Australia is likely to find strong support for this initiative, particularly as members Canada and Mexico face complicated trade disputes with the US.

Australia should use its membership in the Regional Comprehensive Economic Partnership, noting sensitivities with Chinese membership, and engage with European partners through the World Trade Organization to maintain a diversified trade portfolio.

Maintaining close ties with the US administration and avoiding escalatory trade disputes is paramount. With US$77 billion in two-way trade and bilateral investment stock valued at US$1.6 trillion, Australia must emphasise the mutual benefits of the economic relationship and the potential damage that protectionist measures could inflict on both countries.

This engagement will require an understanding of the administration’s priorities and concerns. Australia must communicate its value as a strategic and economic partner, underpinned by a mutually beneficial bilateral free trade agreement and shared history. In Trumpian terms, Australia must be clear that it is no economic or security freeloader; its global influence is due to real expenditure of time, effort and resources at a level well above that expected of a middle power.

While maintaining strong ties with the US is essential, Australia must also enhance its domestic economic resilience and diversify its trade partnerships. This approach should include investing in innovation, developing new industries and strengthening ties with regional partners. Such measures will reduce Australia’s vulnerability to external shocks and enhance its strategic autonomy.

By addressing the new administration’s concerns and demonstrating its value as a reliable ally and economic partner, Australia can secure its interests and navigate the challenges of a Trumpian trade world.

Japan navigates a course through Trump-era shoals

Japan’s relationship with the new Trump administration is off to not a bad start: so far, the two countries are agreeing on more than they are disagreeing.

The big development in the relationship since Donald Trump’s inauguration has been Prime Minister Shigeru Ishiba’s meeting with him on 7 February.

Before the visit, there were several apprehensions. Those included Ishiba’s shaky political position at home, China’s status as Japan’s largest trading partner, former president Joe Biden’s blocking of Nippon Steel’s acquisition of US Steel, the persistent threat from North Korea and Trump’s unpredictable approach to Kim Jong-un.

Against this backdrop, Ishiba faced the difficult task of aligning Japan’s strategic priorities with the Trump administration’s policy positions, such as the imposition of tariffs, withdrawal from the World Health Organization, sanctions against the International Criminal Court, and controversial claims over Gaza, Greenland and the Panama Canal. A challenge for Ishiba was to address those issues in a manner that best served Japan’s national interests, while simultaneously building a personal rapport with Trump—similar to the relationship former prime minister Shinzo Abe cultivated—by adopting a conciliatory approach without compromising Japan’s interests.

It appears Ishiba played his cards well. From the outset, he met Trump’s expectations by pledging to increase Japanese investment in the United States to US$1 trillion. This commitment, particularly in the automotive sector, will not only support Trump’s ‘Made in America’ agenda but also create thousands of job opportunities.

Additionally, Ishiba offered to rebalance trade relations by increasing imports of US liquefied natural gas, conforming with a Trump-endorsed slogan, ‘Drill, baby, drill.’ He also skilfully negotiated the previously blocked Nippon Steel investment, agreeing to a compromise whereby the US will retain a majority stake.

Geopolitically, the two leaders agreed on their continuous commitments to a free and open Indo-Pacific, assuring the continuity of Abe’s foreign policy. Japan’s 2022 announcement to double its military spending by 2027, in response to the perceived threat from China and North Korea, aligned with Trump’s tough stance on Beijing—although the level of spending may not satisfy the Trump administration, which demands that NATO members contribute a minimum of 5 percent of GDP. The continued stationing of 54,000 US military personnel in Japan also sent a positive signal of the solid bilateral alliance.

During the meeting, Ishiba cautiously skirted around some of Trump’s other controversial policies—such as the US withdrawal from the World Health Organization, sanctions against the International Criminal Court, and territorial ambitions in Greenland and the Panama Canal. Those issues hold long-term significance for Japan, but do not require immediate action.

Notwithstanding those identified convergences, Japan has to face challenges and difficult decisions in the coming months. A major strategic dilemma for Japan will be balancing rules-based and merit-based approaches.

For instance, the US claims of ‘ownership’ of Gaza may contradict Japan’s support for a two-state solution. In the case of the US-China trade war and the imposition of tariffs, Japan must tread carefully, not only because China remains its largest trading partner and one of its primary investment destinations but also because China has lodged complaints about US tariff measures with the World Trade Organization.

Trump’s proposals to make Canada the 51st US state, gain control over Greenland (an autonomous Danish territory) and reclaim the Panama Canal, combined with China’s ambitions to unify Taiwan with the mainland, present complex challenges. Trump’s possible peace plan for Ukraine should cause concern among those who believe that Ukraine today may be East Asia tomorrow.

While the US-Japan joint statement opposes any attempts to unilaterally change the status quo by force or coercion, Japan will need to decide whether to draw a parallel between the US and China or adopt a double-standard. Alignment with US territorial claims needs careful legal and political scrutiny within the Japanese government. Diplomatically, such alignment could undermine Japan’s support for a rules-based order, complicating its response to similar attempts by China, Russia or North Korea.

Considering the evolving strategic dynamics, it appears that where Japan’s core interests are concerned it is now time for Japan to display its strategic autonomy. This will prove instrumental in enhancing its credibility in the region and expand the area of cooperation with other partners, such as Australia, India, South Korea and ASEAN members.

At the same time, while strategic autonomy may increase Japan’s policy manoeuvrability, it will be meaningless if it has neither its own principles nor policy alternatives. Regardless of the US policy, Japan’s facilitation of a free and open Indo-Pacific, including through the provision of development assistance and capacity-building based on the interests of recipient states, should not only stabilise regions where the US is expected to reduce its commitment; it should also make Japan a reliable and responsible guardian of the rules-based order.

We can predict Trump’s military policy. Here’s how Europe must react

We now know the main strategist in US President Donald Trump’s administration will be Elbridge Colby, nominated as undersecretary of defense for policy.

Colby is one of the most outspoken and transparent policy leaders in the Trump team, so European capitals can easily assess his worldview and likely moves. They must appreciate his perspective, which prioritises China as the United States’ main threat, and so they must do more in terms of defence.

From my own interactions with him, here is how I understand his big-picture assessment:

First, China is the ultimate threat to the US. China is an urgent threat, as it is outpacing the US in many key indicators and is clearly preparing for a global war. China could win such a war against the US, whereas other countries couldn’t.

Second, Colby believes the US is overstretched strategically and militarily. The US has overpromised security in many places and does not have the capacity to deliver on all its commitments. So it must prioritise. Almost everything the US will do strategically and militarily must be aimed at countering China and deterring it from launching a kinetic war.

Third, many US allies, from Europe to East Asia, are asking for US protection but not sufficiently funding their own defence, in Colby’s view. Defence spending of two percent of GDP in Europe or Japan is clearly not enough given current strategic threats.

The US defence industry base is weak, underfunded and poorly managed, Colby believes. It must be boosted and put on track, with a focus on building up the military power of the US and of core allies, power that is needed to confront China.

This world view of the incoming undersecretary will shape Trump’s expectations of European nations, and it suggests what they should do.

First and foremost, European defence spending must at least double. Trump has indicated a target of 5 percent of GDP, but only Poland is on track to reach it soon. Most NATO allies are only just finally meeting the 2 percent, deep-peace era minimum of 1990s.

Northern, central and eastern European countries—which have real fears of a possible Russian military attack—are urgently boosting their defence spending. For them, 4 percent sounds realistic.

Yet many western and southern European NATO members—facing economic problems and lacking the such fear of Russia—will surely reject such high spending targets. This may create a rift inside NATO between the eastern flank states and the rest of Europe. We may see Trump’s threats last year come to reality—that the US will protect only allies who spend enough.

Second, European states must expect that the war in Ukraine will be almost entirely their problem, not a transatlantic issue. If rich European states want Ukraine to survive, they must put their money where their proclamations about the epoch-deciding Russian war in Europe are. European capitals should offer to buy US weapons and ammunition for Ukraine. This is a deal the Trump administration may accept in exchange for its continued support of Kyiv.

European states need to send significant equipment and ammunition reinforcement to Ukraine for its immediate defence and to hold any potential future frozen contact line in its territory. If European NATO countries don’t, we will just keep watching Russia destroy brave yet exhausted Ukraine piece by piece.

Third, central and eastern European states should see a chance to transform themselves from beggars for US protection to active supporters of the US in its primary theatre as it confronts China.

To be valued in global US military strategy, they need to lift defence spending to between 4 and 5 percent of GDP and scale up their arms industries to reinforce their own forces and Ukraine’s. Moreover, they should become involved in East Asian security, giving Washington another reason to care about them as they face the Russian threat. They could, for example, help train Japanese, South Korean, Philippine or Taiwanese soldiers in such areas as cyber, coast guard, air defence, military logistics and civil-military preparations.

NATO’s eastern flank is preparing for a large defensive war against Russia, while East Asian states must change their defensive postures considering the threats from China, Russia and North Korea.

We can expect the Trump administration to focus on deterring China from taking hostile action against Taiwan. So that is where smaller central and eastern European allies should look to help. They can provide direct political support. They could put particular effort into training Taiwanese troops on US soil, and they could build many thousands of drones for a US strategy of turning the Taiwan Strait into a hellscape for a Chinese invasion force.

Trump, and Colby, would be pleased.

Economic coercion tests international organisations

The rising use of economic coercion is a symptom of an increasingly unstable world that is struggling to contain rise of China and is no longer bound by the institutions established in the wake of World War II.

US President Donald Trump’s scattergun threats of punitive tariffs are a continuation of this trend. The Biden administration redoubled use of export controls to slow the spread of US technology to China. The West coordinated sanctions on Russia over its invasion of Ukraine, including the appropriation of its foreign exchange reserves. And China has repeatedly used boycotts and regulatory punishments targeting businesses of nations that have displeased it.

US legal firm Gibson Dunn, which tracks the use of economic coercion, says the Biden administration pursued ‘the most aggressive and far-reaching use of international trade tools of any US administration in history’. The number of individual designations under the US economic sanctions regime more than doubled to 16,400 in the past four years, with 3300 names added just last year.

The United States intensified its financial squeeze on Russia last year, imposing secondary sanctions on financial institutions of third countries that facilitated transactions with Russia’s military or industry, even if they had no knowledge of the prohibited activity.

The Biden administration also expanded the use of export controls on technology sales to China to cover artificial intelligence, quantum computing and chip-making equipment. A new development was a restriction on outbound investment in Chinese advanced technology businesses.

It is early days, but the Trump administration shows signs of further intensifying economic coercion. In its first three weeks, it issued direct threats of punitive tariffs on Canada and Mexico, demanding tighter border control on migration and fentanyl, and on Colombia, demanding it abandon its rejection of military deportation flights. Canada, Mexico and Colombia all took steps to appease the US.

Trump has also threatened punitive tariffs on Denmark and Panama, if they fail to hand over Greenland and the Panama Canal respectively. He has directed similar threats towards Egypt and Jordan if they fail to accept relocation of the Palestinian population.

The new administration is yet to spell out its policy towards Russia, however Trump threatened ‘high-level taxes, tariffs, and sanctions’ if it refused to negotiate over Ukraine.

The administration has also reinstated strict sanctions on Iran, including secondary sanctions on foreign organisations facilitating Iranian trade. It is unclear whether this will extend to Chinese banks, which the Biden administration was reluctant to attack. Furthermore, Trump has rescinded a deal negotiated by the Vatican under which the US would relax sanctions on Cuba and remove its designation as a sponsor of terrorism in return for the release of political prisoners.

China is ramping up export controls on critical minerals. Last December it banned the export of germanium and gallium, used for microchips, and antimony, used for ammunition, to the US. This month it added a requirement for government approval on the export of five further metals, including tungsten.

China is also restricting the export of critical minerals processing technology, which could affect planned rare earths and lithium processing plants in Australia.

Economic coercion has been accelerating alongside globalisation since the mid-1980s. As trade rose from 15 percent to 25 percent of global GDP, it became an attractive target. According to the historian Nicholas Mulder, sanctions were used twice as much in the 1990s and the 2000s as in the period from 1950 to 1985. Their use had doubled again by 2010. It has likely more than doubled once more since Russia’s attacks on Ukraine.

International trade agreements matter little when powerful nations use economic coercion. China ignored its 2015 trade agreement with Australia when it imposed bans on Australian exports. The US’s latest tariffs on aluminium and steel which have been justified on national security grounds, ignore both its trade agreement with Mexico and Canada and World Trade Organisation (WTO) standards.

China has foreshadowed a complaint to the WTO over the US’s 10 percent tariff on Chinese exports. However, the US has effectively shut down the organisation’s appeal panel as presidents, starting with Barack Obama, have refused to approve new members. The US contends that the WTO has facilitated the rise of China at the expense of US manufacturing.

During the first Trump administration, legislation was drafted to withdraw from the WTO. Now, an executive order that establishes a review of US participation in all multilateral organisations will likely confirm US withdrawal. The governor of the Bank of England, Andrew Bailey, has expressed concern that the review may also lead US to pull out of the International Monetary Fund and the World Bank.

Those organisations and the General Agreement on Tariffs and Trade, the predecessor of the WTO, were established in 1944 to avert the sort of breakdown in international economic relations that created the conditions for WWII. Seventy years on, they are proving to be inadequate brakes on the rise of economic hostility.

What Donald Trump can learn from allies on foreign aid

There are smarter and more effective ways to streamline and re-strategise US foreign aid.

The Trump administration is not the first Western government to envision a stronger, safer, and more prosperous country by integrating foreign aid with strategic objectives. The experiences of the United States’ Five Eyes partners, particularly Australia and Britain, offer encouraging evidence for reform, having achieved tightly targeted development programs supporting diplomatic and strategic priorities. They also offer sobering lessons about implementation pitfalls, including the abrupt disruption of established programs, especially those already aligned with strategic policy, loss of critical skills among government personnel and heightened unease among international partners.

The logic driving aid integration is compelling. In an era of great power competition, maintaining separate tracks for diplomacy and development is an unaffordable luxury. China has harnessed development, along with trade and financial investment, as an instrument of strategic influence through both soft and hard means. Both Australia and Britain recognised this reality, merging their aid agencies into their foreign ministries to create more strategically coherent development policies. Having made clear its intent to fundamentally reshape USAID, the Trump administration has the opportunity to learn from its allies in the pursuit of the American national interest.

A unified strategy: Australia 

The Australian government integrated the Australian Aid Agency (AusAID) with the Department of Foreign Affairs and Trade (DFAT) in 2013 with the stated goal of better aligning Australia’s development, foreign policy, trade priorities, strategies and objectives while bringing an enhanced focus on the Indo-Pacific. The integration accompanied a reduction of Australia’s development funding. After reaching a peak of more than $5 billion in 2013–14, or 0.33 percent of gross national income, Australia’s development budget has progressively declined. In 2023-24, the budget was $4.8 billion, or 0.19 percent of gross national income. This change is also stark in terms of the slice of the Australian budget spent on foreign aid compared to defence expenditures.

An independent review of the integration in 2019 found that 90 percent of the Australian government’s strategic targets for the integration had been met, driving development allocations towards infrastructure and the Pacific. The review also found ‘examples of development goals being more strongly advanced through joined-up, whole-of-department efforts.’

These initial efforts—such as the Pacific Seasonal Worker Scheme and the Australian Infrastructure Financing Facility for the Pacific—have since grown to enable more ambitious and innovative integrated development and strategic initiatives. Key among these are the Falepili Union with Tuvalu (which provides Australia with strategic denial rights and Tuvalu with climate resilience monies and opportunities for migration), the agreement between Australia and Papua New Guinea (which encompasses development and security elements) and Telstra’s acquisition of Digicel Pacific, the largest mobile provider in the Pacific, with the Australian government’s support amid rumors of interest from China Mobile. While the review stepped carefully around the issue, it found integration had increased Australia’s ability to counter efforts to overshadow Australia’s influence, like China’s Belt and Road and Digital Silk Road initiatives.

However, the review also found several areas of concern. Early morale problems among staff arising from the abrupt way the integration was implemented had largely dissipated by 2019, but a ‘pronounced deterioration in skills and systems’ remained. The review found that ‘almost 1000 years of experience left [government service] shortly after integration.’ Additionally, ‘estimates suggest another 1000 years of experience’ left the department in the five years before 2019 due to the department underestimating the capability needed to design and deliver development programming.

This loss of know-how continues to hamper effectiveness over a decade later. While development is now firmly accepted as a tool of statecraft, best wielded as part of a whole-of-government strategy, an article by the review’s author 15 months ago suggested DFAT still had room to improve in terms of fully harnessing its development delivery.

Strategic prioritisation: Britain

The merger between Britain’s Department for International Development and its Foreign and Commonwealth Office occurred in 2021. The principal intention behind the merger was to better align Britain’s development activities with its wider diplomatic, trade and geopolitical interests, both in strategic terms and in terms of in-country representation. The merger coincided with a decision to reduce the Britain’s development funding commitment from the 0.7 percent of GDP enshrined in law to 0.5 percent of GDP. Notably, the integration occurred while Britain was experiencing the economic slowdown of the Covid-19 pandemic, which resulted in a double blow to funding in absolute terms, constituting a 30 percent reduction overall.

Alongside the budget reductions, a strategic prioritisation of development initiatives was pursued, in which Britain focused on bilateral funding to a smaller group of countries where measurement of effect is often easier to determine, but at the expense of some wider bilateral and multilateral commitments which were deemed to deliver less tangible value to Britain.

In addition, Britain identified a select set of issues for its development focus, namely climate investments, girls’ education, and global health, where it had demonstrated expertise and where funding would have constructive spillover effects. For example, improving girls’ education is found to reap positive dividends for local security, prosperity and governance. These initiatives, concentrated in Africa, the Indo-Pacific and South Asia, are all areas in which Britain’s adversaries were harnessing development as an instrument of influence, dependence and coercion.

Britain’s National Audit Office (NAO) review of the progress of the merger in 2024 found positive evidence ‘of where a more integrated approach has improved the organisation’s ability to respond to international crises and events, which has led to a better result.’

Two such examples were Britain’s coherent humanitarian, diplomatic, and military response as the leading European power supporting Ukraine after Russia’s invasion, and the joint humanitarian and political response to the Ebola crisis in Uganda. The findings supported the rationale for the merger and the modernisation of the department as fit-for-purpose in sharpening the Britain’s geopolitical interests. However, the NAO also noted that ‘the indirect costs’ of the merger ‘in terms of disruption, diverted effort and the impact on staff morale should not be underestimated.’

The NAO also reviewed the effect of the overseas development aid reduction and found that while the prioritisation compelled in the government’s activities had some positive dividends, ‘the speed and scale of the budget reduction, and the lack of long-term planning certainty, increased some risks to value for money.’

What can the US learn?

These cautionary tales suggest some considerations for the Trump administration:

First, pace matters more than may be immediately apparent. While decisive action has its advantages, too rapid a transformation risks institutional damage that could take years to repair. Recipient partners need to be assured about the value of the relationship, as reputation matters when development partners have the luxury of choice. A phased integration that maintains critical expertise while gradually aligning strategic direction would likely prove more effective in the long term.

Second, capability preservation requires active management. Both Australia and Britain learned the hard way that development expertise isn’t quickly or easily replaced. The technical knowledge required for effective commissioning, procuring, financing and managing of development programs, while not unique to the aid world, is distinct from traditional diplomatic and geostrategic policy skills. Any US reforms must include concrete plans for retaining and developing each of these specialised capabilities and empowering them to work together to deliver coherent whole-of-government priorities.

Third, funding stability enables strategic coherence and builds influence with partners. Britain’s experience shows that simultaneous organisational and budgetary upheaval can undermine even well-conceived reforms. While efficiency gains are desirable, treating integration primarily as a cost-cutting exercise risks strategic self-harm. With strategic competitors snapping at our heels, such interruptions cannot always be remedied.

Fourth, clear metrics for success must encompass traditional development indicators and strategic effects. Australia’s focus on its immediate neighbourhood and Indo-Pacific infrastructure and Britain’s emphasis on areas of demonstrated expertise and reputational value offer useful models for linking foreign aid and development assistance to broader national interests.

The stakes for getting this change right are immense. China has outflanked the West in harnessing foreign aid as a strategic tool of statecraft, having learned from the experiences of Western development agencies. The US cannot afford to unilaterally disarm in this arena and sacrifice its many areas of retained advantage through poorly executed reforms.

Secretary of State Marco Rubio’s framework of strength, safety and prosperity provides useful guideposts. Development programs should demonstrably enhance US security partnerships, expand trade relationships that benefit US workers, or strengthen allies facing authoritarian pressure. Programs that cannot do this should be reconsidered.

Achieving these goals requires maintaining the US’s development capabilities even as they are more tightly aligned with strategic objectives. The experiences of Australia and Britain suggest this balance is achievable but demands careful attention to ensure areas of national strength and influence are strengthened, not squandered.