Tensions must be managed, not ignored. Time to bring funding forward

Geopolitics is driving the dangerous strategic realities that Australia faces.

Beijing’s expansionist agenda is seen through its military aggression and commitment to undermining and changing international rules; Russia continues its revisionist war against Ukraine and a disruptive foreign policy; and we were reminded on October 7 that terrorism remains a top security threat with global implications.

However, the way Australia responds is within our control. Strong foreign and security policies, matched by serious defence investment, can ensure that potential adversaries looking to upend the status quo are deterred from dragging us into conflict.

There are two clear, related priorities. The first is to ensure our foreign and defence policies are consistent and not at odds – the latter being a misstep that seems increasingly likely. The second priority is to invest properly in our defence force.

The defence and intelligence communities have made the hard-headed strategic assessment-articulated in the Defence Strategic Review – that Beijing’s assertiveness is the greatest threat to our security and needs to be checked.

Our diplomacy, meanwhile, has been seeking “stabilisation”, in which we improve the atmospherics of the Australia-China relationship, reduce the focus on areas of disagreement and look for co-operation.

It’s a laudable goal, but is it sustainable or even consistent with our strategic assessments?

There are signs that stabilisation is coming at a cost to our strategy of seeking peace through strength and deterring Chinese aggression by having a highly capable defence force that we will deploy to support regional stability.

We have been too quiet about Chinese breaches of international rules, such as the bullying of Philippines vessels in the South China Sea. When the Chinese navy threatened the safety of Australian personnel, the government sent mixed signals as to how seriously it took the incident, with Defence Minister Richard Marles issuing a clear statement but Prime Minister Anthony Albanese unable to say that he had raised the issue with Chinese President Xi Jinping.

That inconsistency removed the opportunity for what should have been a moment of Australian unity in the face of direct confrontation and injury to defence personnel.

There is a growing risk of a defence and foreign policy gulf in which we pull our punches diplomatically while trying to show military credibility through initiatives such as AUKUS and defence exercises.

Indeed, it is why there is an inherent weakness in democracies viewing foreign policy as soft power and defence policy as hard power with distinct roles, while our authoritarian rivals see them as fused.

Our ability to deter aggression will be undermined if our defence policy suggests we face serious threats while our diplomatic communications suggest we don’t.

Good diplomacy isn’t about denying differences but confronting them with clear affirmation of the legitimacy of Australia’s national interests, and our right to protect them.

Otherwise, Australia risks playing into Beijing’s strategy of claiming that any response to Chinese provocation amounts to Australian escalation.

Of course, providing assurances is an important companion to deterrence. The West is justifiably assuring Beijing that we don’t seek regime change in China, Taiwanese full independence, nor to contain Chinese growth where it is rule-abiding and peaceful.

Such messages help reduce mistrust, but assurances alone provide no deterrence, only incentivising more bad behaviour, which is why they must be accompanied with unequivocal signals that we will respond when Beijing breaches rules.

Failure to do so is the mistake that Europe made with Moscow, relying too heavily on assurance that NATO posed no threat to Russia, even while Vladimir Putin escalated aggression after 2008 and as Europe wallowed in complacency with meagre defence spending.

If we do not project the strength to match the reality of the threats, we risk making the dangerous misjudgment that Winston Churchill implored England to reverse in 1932 when he said he could not recall a time “when the gap between the kind of words which statesmen used and what was actually happening in many countries was so great as it is now.

The habit of saying smooth things and uttering pious platitudes and sentiments to gain applause, without relation to the underlying facts, is more pronounced now than it has ever been in my experience”.

The recent AUKUS defence ministers’ meeting showed progress in developing capability but also importantly expressed clear collective intent. The ministers’ statement that “AUKUS contributes to integrated deterrence by pursuing layered and asymmetric capabilities” sent a clear signal to Beijing.

These signals can’t be limited to defence ministers-our long-term sovereignty requires deterrence to be a national priority, baked into our economic and industrial policies, bringing industry and the public along the journey and not merely surprised when crisis hits.

At the bottom line, the Albanese government needs to invest in defence in a way that matches the rhetoric that statements such as the DSR have expressed.

Resourcing defence to match a damped-down foreign policy aim of stabilisation may result in short-term savings but will only lead to more spending down the track.

As ASPI’s budget analysis in May stated, the additional funding the government has promised beyond the forward estimates period needs to be brought forward. Budgets are tight, but we are not going to deter aggression unless we are prepared to put real money into defence capabilities.

It would be wonderful if all states got along and if all conflict and unfair competition could be resolved by diplomatic niceties. History shows this is wishful thinking.

Diplomacy is vital but it is ineffective if viewed as the good cop to defence’s bad cop; a message to adversaries that we do not have the willingness and competence to use our hard power.

Meanwhile, our own industry perceives a lack of seriousness and our public senses a lack of need and justification for investment.

Indeed it is defence investment that helps ensure diplomacy can focus on managing, not ignoring, tension.

It is the will to confront difficult realities and think through worst-case scenarios that provides the greatest chance of developing effective strategies to deter them, and to be best prepared if they do eventuate.

Some light amid the enduring cyber nightmares

The  cyber security strategy released last week by the Albanese government is about collaboration and communication, not about conjuring our worst national security nightmares. It’s focused on industry and consumers.

The government, industry and citizens must work together with trust for Australia to make real change in our cyber security, and this strategy recognises that.

One of Cyber Security Minister Clare O’Neil’s objectives seems to be humanising cyber and making it appealing and accessible to everyday Australians.

Of the six “cyber shields” in the strategy, “strong businesses and citizens” is number one. The first actions out of the gate are directly helping small and medium-sized businesses with free cyber health checks and the establishment of a small business cyber security resilience service to give advice.

Arguably, these are things the Australian Cyber Security Centre should be doing already, but the $7.2 million health checks and $11 million advice program have been welcomed by industry groups.

The government is also inviting business to “co-design options” for regulation or legislative changes that affect industry.

These include a ransomware reporting obligation, a new cyber incident review board, a code of practice for cyber incident response providers, mandatory standards for smart devices, a voluntary labelling scheme for smart devices and a code of practice for software development.

It’s great that the government is including industry in the conversation, but open-ended “co-design” risks delaying real action. These phases must be strictly controlled with defined end dates.

More broadly, the strategy isn’t revolutionary. On a generous assessment, perhaps eight of the 48 prescribed actions are new initiatives. The rest Australia has tried before, or has already introduced.

This shows that, even in a constantly moving cyber security landscape, there are enduring problems. It also shows that the government is willing to build on what has been done before rather than wipe the slate clean for the sake of politics.

The two most important enduring problems that frustrate Australia’s cyber security are information sharing and cyber workforce shortages, and each has a “cyber shield” dedicated to it.

Information asymmetries between consumers, companies and governments makes stopping threats and incident responses slow, ineffective and expensive. The strategy seeks to improve information-sharing by creating better motivations and opportunities to share.

Share prices drops, reputation risks and legal ramifications are among the reasons companies avoid reporting cyber incidents to the government. Sometimes it’s honest confusion about when and how to report. The strategy proposes a range of actions to create the right environment to motivate information-sharing.

The “no fault, no liability” ransomware reporting proposal and a proposed “limited use obligation” that clarifies how the Australian Signals Directorate and the cyber security co-ordinator may use cyber incident reporting will give companies greater peace of mind. Clarifying cyber security reporting obligations under existing security of critical infrastructure legislation will remove ambiguity about how and when to report.

The strategy also creates opportunities and platforms to foster industry-government threat intelligence sharing through a cyber executive council, streamlining ASD’s reporting portal and establishing or scaling-up Information Sharing and Analysis Centres (ISACs) – a model that has worked fairly effectively in the United States for 20 years.

The co-led Microsoft-ASD Cyber Shield (MACS) – although presently opaque – should also enhance national threat intelligence sharing and capabilities. It will focus on detecting, analysing and defending against sophisticated nation-state cyber threats.

Australia’s cyber workforce, however, is the fly in the ointment. Our workforce shortage has been around for decades and is only getting bigger.

The problem is even more acute in government, where below-market salaries and onerous security requirements are additional barriers to an adequate cyber workforce.

The strategy refers to building the local cyber skills pipeline through better workforce analysis, vocational training, changes to the primary and secondary curriculum and providing additional higher education Commonwealth supported places.

These are good but existing policies. The strategy’s only real new action is increasing skilled migration. In the same breath, questions of detail are shifted to the government’s upcoming migration strategy to answer.

Australia is not alone in the global struggle to attract talent, and skilled migration settings are difficult to get right. It also raises complex questions about other major policy areas, not least of which are housing, infrastructure and the cost of living.

There is a sense that increasing migration is an easy answer to what should be a more expensive and difficult conversation on how to build on the existing policies. One moonshot would be to redirect some of the $15 billion National Reconstruction Fund into subsidising education to get tens of thousands of young Australians into cyber training and careers.

As with all strategies, implementation is essential. An action plan naming lead agencies offers welcome accountability.

The strategy’s two-year “horizons” also create a realistic runway with what should be built-in evaluation and pivot points.

And we should expect to pivot, given the degrading security environment and the rate of development of transformational technologies like artificial intelligence. On these, the strategy’s actions are unlikely to put Australia ahead of the curve, being limited to “embedding cyber security” into ongoing work and updating the Information Security Manual.

In many ways, the Department of Home Affairs and the broader Australian government are well-placed to move forward on cyber security.

As the strategy itself states, we have robust regulation in the recent Security of Critical Infrastructure legislation and strong offensive and defensive capabilities with ASD’s REDSPICE funding of $9.9bn over 10 years. Australia is a trusted partner sitting within a powerful set of multilateral arrangements, including the five eyes, AUKUS, the Quad dialogue and the Pacific Islands Forum.

Home Affairs has also established the new cyber security co-ordinator’s office, a separate team to manage the strategy’s implementation, and a detailed Action Plan to execute.

On the other hand, the department is still reeling from the departures of Secretary Mike Pezzulo in September, and cyber security co-ordinator Darren Goldie last week, after only four months in the job.

Dennis Richardson’s scathing review of Home Affairs’ handling of offshore detention was leaked around the same time Goldie’s recall was announced. One of the unspoken actions of this strategy’s first horizon out to 2025 will be navigating Home Affairs’ leadership uncertainty, fiscal constraint and external scrutiny.

The U.S. Can’t Lead on Quantum Computing Alone

Quantum computing will be one of the most defining technologies of the century. It will intersect and enhance capabilities across sectors such as climate change, manufacturing, biotechnology, and artificial intelligence.

China is ranked second to the United States in terms of research about this technology, according to the Australian Strategic Policy Institute’s Critical Technology Tracker, and the race to achieve quantum supremacy is intensifying.

In particular, the United States must work to mitigate the risks that quantum computers pose to national and economic security. These computers will be able to surpass existing cybersecurity encryption standards in minutes, even in situations that would take a conventional computer years to solve, compromising the confidentiality and integrity of the security used for everything from banking to data storage and internet communication.

Preparations for such a scenario are already being undertaken in the United States by the National Institute of Standards and Technology, which has released its first batch of four cryptographic algorithms designed to withstand decryption by a future quantum computer.

However, the United States can’t safeguard its leadership on quantum computing by acting alone. In a similar situation to the semiconductor industry, there is a limited global talent pool of expertise in the sector, and Washington needs to coordinate the human capital, research and development, and the advanced manufacturing capabilities needed to bring quantum computing online in a time frame conducive to the pacing threat that China poses.

The United States has already acknowledged the pressing need to secure advanced technology supply chains through the passing of the CHIPS and Science Act in August 2022. As the country looks to place similar export controls on advanced technologies such as quantum computing, it must not cut its allies out.

Instead, Washington needs to leverage the complementary strengths of each nations’ advanced technology ecosystems. That collaboration must begin with semiconductors.

Conversations on the security of advanced semiconductor supply chains and the importance of investment in quantum computing often occur independently. Yet, Washington’s ability to maintain global leadership in the quantum computing industry hinges on secure access to advanced semiconductor manufacturing.

Advanced semiconductors serve as the processors of quantum computers. They contain “qubits” (short for “quantum bits”) that enable these computers to process algorithms and equations significantly faster than standard computers. The more qubits that a quantum computer contains, the more powerful it is. In the global race to develop a useful quantum computer that is commercially scalable, access to advanced semiconductor manufacturing will be a determining factor in winning.

China is being forced into domestic manufacturing of advanced semiconductors due to U.S. export controls imposed under the CHIPS and Science Act. However, in August, Chinese telecommunication giant Huawei released its latest smartphone, containing an advanced, Chinese-manufactured 7 nanometer chip, which suggests that China’s semiconductor industry is adapting to the export controls designed to slow its advancements. China is also developing its advanced foundry capabilities, which are used in the chip manufacturing process, and this will further aid its quantum computing industry.

Australia is a natural partner for the United States on quantum computing. Despite having only 0.3 percent of the global population, Australia is home to 10 percent of the world’s quantum scientists; these scientists are supported by a national quantum strategy. Announced in May, the strategy lays out the ambitious goal of building the world’s first error-corrected quantum computer and the importance of collaboration with trusted partners in the private sector to create it.

Collaboration between the United States and Australia in quantum computing sciences dates to the late 1990s, when there was engagement between the U.S. Army Research Office and Australian quantum computing research centers. In 2021, a landmark statement of intent was signed between the two governments to cooperate and share the benefits of quantum information and science technologies.

But commitment must continue to go beyond government-to-government engagement and involve academia and industry, as well. One example of these partnerships was made in September 2023, when Australia-based companies Q-CTRL, a quantum infrastructure software developer, and Diraq, a leading innovator in silicon-based quantum computing, announced a joint venture in pursuit of projects funded by both the U.S. and Australian governments, with the shared goal of accelerating the commercial adoption of quantum computing.

Alongside the U.S.-Australia bilateral relationship, the AUKUS security arrangement offers the two nations an endorsed pathway to deepen innovation ties and achieve scalability alongside the United Kingdom. Quantum computing has been identified as a priority for AUKUS partners under their technology-sharing agreement as one of eight specified areas of advanced capability collaboration. While global collaboration should not be limited to AUKUS partners, it provides a starting framework for coordinating strategic investment between the three nations.

U.S.-based quantum computing company PsiQuantum is a prime example of partnerships between the quantum industry and semiconductor manufacturers within an alliance ecosystem. With Australian origins and a presence in the U.K. quantum computing industry, PsiQuantum has established a strategic partnership with the U.S. semiconductor manufacturer GlobalFoundries.

Investment from the U.S. semiconductor industry alongside the Australian and U.K. quantum computing industry can facilitate access to the advanced manufacturing capabilities needed to develop quantum computing technologies. The collaboration utilizes otherwise disparate talent pools, provides U.S. industry with access to additional advanced research and development, and has the dual benefit of diversifying advanced manufacturing supply chains for the United States.

The United Kingdom and Australia host a range of quantum organizations that could be grown through similar partnerships with U.S. semiconductor foundries. In the U.K., the National Quantum Computing Centre is backed by government support. Similarly in Australia, there are several global quantum front-runners.

Beyond AUKUS, the United States can also look to other nations for examples of successful public-private partnerships, such as that of Canadian quantum company Xanadu, which has partnered with the Korea Advanced Institute of Science and Technology in South Korea to develop a quantum workforce pipeline. The institute also undertakes advanced semiconductor research, and South Korea is, of course, a key player in global advanced chip manufacturing supply chains.

While industry players understand the technical needs of their technologies, support from government is key to accelerating these activities. It provides access to capital and markets that encourage industry growth where, under natural market conditions, it might have been slower.

The United States and allied governments therefore need to collaborate to provide investment incentives to encourage public-private partnership between quantum computing companies and mature U.S.-based chip manufacturers. Collaboration will require relationship building, infrastructure investment, and research and development coordination that should begin now.

Moreover, as global leaders in quantum computing, the United States and allies also can shape the industry as it develops through the establishment of international standards and norms, ensuring that the technology is brought online responsibly. This includes the ability to shape strategic supply chain development and ensure that infrastructure such as specialized data centers and a highly skilled workforce are built and cultivated within a trusted alliance ecosystem that can withstand geostrategic competition.

The United States is already throwing everything it can at slowing down China’s access to the technology and the expertise it needs to gain a competitive advantage in key technology areas. Access to talent, research and innovation, and advanced semiconductor manufacturing are vital ingredients in achieving quantum computing leadership. As global technology competition continues to intensify, a strong history of allied partnership is an advantage that the United States holds over adversaries, and it needs to be bullish about leveraging it.

The Role of the Private Sector in Cyber Competition

The Lawrence Livermore National Laboratory’s Center for Global Security Research (CGSR) workshop on ‘The future of cyber competition’ was held to further an understanding of what lessons the US, and its allies, could take from how cyber has been used during Russia’s war on Ukraine. Discussion between senior US government officials, private sector experts and academia over the two days was key in highlighting that it is important to define what successful public-private partnerships look like, and how effective relationships can be built to best prepare for future conflict.

The importance of public-private partnership is at the forefront of policy debate as global technology competition continues to intensify. The passing of legislation in the United States, such as the CHIPS and Science Act 2022, aimed at securing semiconductor supply chains, and inquiries by Senators into Elon Musk reportedly thwarting a drone attack on Russian targets by denying the use of SpaceX’s Starlink satellites, is indicative of the undeniable presence of the private sector in strategic competition and global conflict. Going forward, US and allied governments need to make considerations around the normative parameters for collaboration and private sector engagement in cyber conflict, particularly given critical digital infrastructure and large troves of personal data is largely operated and managed by private sector entities.

A point raised throughout the CGSR workshop, was that strengthening and encouraging the private sector’s ability to act in geostrategic competition is not necessarily a status quo that should be reinforced. ‘Big tech’ companies are in some instances, operating with the scale and influence of countries, as is the case with SpaceX, which has been central in providing critical communication infrastructure during the Ukraine war. These companies are not bound to national interests and typically view themselves as international organisations headquartered around the world with their primary activities driven by commercial interests. This perspective was raised in conjunction with the point that while Ukraine has demonstrated an adept ability to use soft power to harness private sector support, this is not necessarily replicable in future conflicts. The US and allies need to consider if it is within their interests to normalise the independent involvement of private sector entities with the capacity to function on the scale of a combatant country during conflict particularly in a scenario where a large private entity might aid a foreign adversary.

Regardless, while the nuances of the normative parameters for private sector involvement in geostrategic competition are still developing, the private sector will continue to hold an integral role in cyber and technology competition. Another key point emphasized during the workshop, was the importance of developing a roadmap for engagement and timely communication between government and the private sector. The war in Ukraine has highlighted the need to have these strategies in place prior to a conflict, as opposed to being built mid-flight. Related to this, is the importance of building the skills within both public and private sectors to effectively communicate in technical areas to non-technical audiences, and vice versa when it comes to explaining strategic policy priorities and how the technical capabilities of the private sector might support them. Cyber is a multidisciplinary field, and having individuals that can act as a conduit between technical and high level geostrategic or commercial audiences is vital, and is a function that should exist ahead of a cyber conflict scenario. The private sector is not a uniform entity, and trust and relationships at an individual level need to be built between public and private entities if constructive collaboration is to occur. Building these relationships will also help identify scenarios where collaboration is needed, and the degree of risk appetite and priorities for both the government and private sector entities. This feeds into a need for public-private partners to candidly understand each other’s unique incentives, which the CSGR workshop was clear in highlighting as important for ensuring partnerships of value can be built.

This is where there is an opportunity for greater collaboration between allies and learning from different approaches for public-private engagement in cyber. Notably, Australia is at the forefront of public-private collaboration in scenario planning for major cyber incidents. In 2023, the Australian government held war gaming exercises with major banks and financial service companies to test response strategies to cyberattacks that target critical infrastructure assets. How allies can execute similar programs to work in tandem with global companies to drill scenarios and understand the capabilities, intentions, and limits of private sector entities will help lay the groundwork when real-time responses are needed.

For the private sector, engaging in these activities does not necessarily commit them to supporting a government position during a conflict, but enables them to define the parameters of their willingness to collaborate prior to the fact, build useful relationships and trust, and think through any legal and public relations considerations they might face.

The CSGR workshop was key in highlighting that in the man-made domain of cyber, collaboration is vital, both with allies and the private sector. As geostrategic competition in the Indo-Pacific continues to intensify, China will also be looking to the lessons of Russia’s invasion of Ukraine to determine where improvements to their utilization of cyber as a tool for information warfare and disruption can be improved. China’s relationship with the private sector differs greatly to the US and its allies, where China has a higher degree of integration. While the discussion at the CSGR workshop raised the point that this reduces China’s private sector’s ability to act quicky, be agile and innovative in their activities and responses, it did not diminish the fact that the US and partners should continue to collaborate to improve their readiness in the ever-changing cyber domain.

Reconsider Using Undersea Cables as Military Sensors

The  United States should think twice about the defense sensing potential of subsea cables.

Advancements in fiber optic technologies mean that subsea cables hold potential as undersea sensors that can detect tsunamis, earthquakes, marine life and, critically, naval vessels.

While the technology is still in its nascent stages, subsea fiber-optic cables have dual-use potential as sensors that could revolutionize naval defense intelligence, surveillance activities and serve as an early warning for the United States and its allies of unwanted foreign operations in the region.

Operationalizing dual-sensing technologies could hold significant potential for defense intelligence in the maritime domain. There are, however, potential risks that sensing technology poses to global economic and communication security, which require careful consideration.

Discussion regarding sensing capabilities for subsea cables is driven by the emergence of distributed acoustic sensing, or DAS, which is an innovative technique that relies on fiber optics to detect pressure waves emanating from acoustics of seismic activity. It requires the use of an unused fiber in the cable, known as a “dark” fiber. Light pulses are sent across the dark fiber using a specialized device called an interrogator.

Advanced signal processing can translate any fluctuations in the reflected light that the interrogator senses as it encounters defects along the fiber.

What makes the technology different to current oceanic sensing is that it doesn’t rely on discrete acoustic or seismic sensors placed along the seabed. Instead, it can potentially cover far greater distances by leveraging dark fibers in existing commercial subsea cables.

Distributed acoustic sensing has incredible potential in subsea defense activities by providing the ability to track both surface and subsurface targets. Whilst limited in range from between 30 to 60 miles at the current stage of development, the data could be effectively integrated into naval intelligence capabilities. From a practical standpoint, the use of dark fibers could impact the capacity of the subsea cables.

DAS sensing would likely be improved if an entire cable were dedicated to that purpose, as opposed to leveraging single dark fibers available in commercial cables. While the dual use aspect of the technology is still in its nascent stages, new commercial subsea cable infrastructure could eventually be leveraged for defense purposes.

Subsea cable development in the strategically important Indo-Pacific highlights the issues and risks due to the intersection of defense interests with critical commercial infrastructure development.

There are significant risks of compromising stability and eroding trust in commercial subsea cable providers if subsea cables increasingly become a point of tension in the strategic competition between China and the United States. Currently, subsea cable infrastructure accounts for 99 percent of global data traffic integral to internet, communication, financial and defense systems worldwide. Disrupting these for defense purposes could place subsea cable infrastructure at increased risk of sabotage by adversaries.

The United States has demonstrated success in routinely blocking Chinese companies — specifically HMN Tech, which has ties to Huawei and the Chinese government — from winning bids to build international cables. Currently, HMN Tech is expected to provide equipment for only 10 percent of existing and planned global cables. Three other cable suppliers — U.S.-owned SubCom and NEC and French-owned Alcatel Submarine Networks — account for approximately 90 percent of new subsea cable construction since 2017.

However, any question of commercial cables being used for defense sensing compromises the image of integrity that industry players have built, and the security and economic advantages this brings.

The market for subsea cables has almost doubled each year given the demand from content providers such as Google, Meta, Microsoft and Amazon, which rely on the cables to deliver their online and cloud services. Consequently, subsea cable industry resources are stretched thin.

As it stands, the subsea cable industry is currently reluctant to explore in depth the potential of sensing technology on commercial cables.

This reluctance is due to more pressing concerns regarding the costs of construction, availability of specialized resources including the 60 cable ships globally, waiting time for permits and costs of maintaining existing cables. The significant cost of laying subsea cables means that construction is generally supported by consortia of content providers or government entities that manage the initial and ongoing costs.

Specifically, there is concern that subsea cable securitization would result in increased regulation, malicious targeting and legal risk regarding data security.

As distributed acoustic sensing technology continues to develop, there is an opportunity for the United States and its allies to lead in engaging with industry and states to set standards regarding the use of subsea cables for sensing. Given that these nations already have a market advantage in subsea cables infrastructure development, they must ensure the technology is not misused, particularly given the intensification of strategic competition in the Indo-Pacific.

The subsea cable industry is an arena for international partnership, as opposed to competition. The announcement of a cofounded U.S., Australian and Japanese subsea cable connecting Micronesia is a clear example of the opportunities for collaboration with multiple beneficial outcomes.

The world relies on the interconnectivity that subsea cables provide to the global commons. It is unwise to let this vital infrastructure fall victim to the geopolitical tensions of the day.

The Road to Critical Mineral Security Leads through Australia

It is commonplace to observe that Beijing enjoys control over much of the globe’s rare earth and critical mineral extraction and processing industries. China built this dominance over two decades and is unwilling to give it up. On the other hand, America’s critical minerals supply chains feature extensive vulnerabilities that private enterprise cannot resolve independently. The U.S. government faces a daunting challenge in establishing resilient, competitive, and alternative critical mineral supply chains immune to disruptions and economic coercion.

The United States must cooperate with its allies on critical minerals for two reasons. First, its industries have expansive demands that cannot be met by increased domestic production alone. Second, it does not possess enough mines and accessible deposits of all the critical minerals industry needs.

The U.S. economy’s already extensive critical minerals demand will grow almost exponentially in the coming decades. Demand for lithium, a crucial input in electric vehicle (EV) batteries, is projected to increase by 4,000 percent in the coming decades. 

No single nation can meet the projected global demand for critical minerals on its own. The Organization for Economic Co-operation and Development (OECD) estimates that fifty new lithium mines, sixty new nickel mines, and seventeen new cobalt mines will be required to meet global demand. These are only three of fifty minerals that the United States now classifies as “critical minerals.”

No nation has enough proven resources to meet this demand, but a few are key. The concentration of minerals is spread worldwide, including in China, Russia, the Congo, South America, and Australia. Many countries with large mineral reserves are strategic competitors or politically unstable.

China currently controls the critical minerals and rare earth marketplace. It is the global lead producer of twenty-nine commodities, including twenty-two metals and seven industrial minerals. It refines up to ninety percent of the world’s rare earth ore.

Where China does not possess a near monopoly, it can control the market through “monopsony”—a market condition featuring one overbearingly and singularly important customer. While it does not produce the most essential battery materials—lithium, cobalt, and graphite—it buys, refines, and exports them to incomparable degrees.

Beijing is using this market power in increasingly coercive ways. It has increased restrictions on its critical minerals exports nine times between 2009 and 2020, more than any other supplier. It has cut off Japanese supply for geopolitical reasons and threatened U.S. defense contractors’ supply chains.

Removing China entirely from global critical mineral supply chains is not economically feasible. But competition is needed. America’s critical minerals supply chains cannot depend on a single nation, especially an unreliable one.

With its unparalleled natural wealth in critical minerals, rare earths, and other vital commodities, Australia has emerged as the key ally to bolster the United States’ security and resilience in this vital domain.

However, Australia needs more capital and foreign investment to transform potential into viable supply chains. To date, Chinese state-owned investors have been more than happy to meet this need. 

As a global region, Oceania alone has outstripped Asia’s mineral production since 2000, and this growth has been driven almost exclusively by Australia. But China was also Australia’s largest buyer—fueling its growth with Australian raw materials. 

The Australian government has already acted to inhibit Chinese ownership of critical minerals mining projects, creating space for capital from the United States and like-minded nations.

Australia’s vastness and lack of funding have left significant natural reserves untapped. It has also left Australia, in mining terms, underexplored. Vast reserves might remain hidden in the Land Down Under. 

The United States is not alone in its demand for critical minerals. Global demand is increasing broadly across large economies, and there will be healthy competition from Japan, the EU, and India. The United States has already begun to deepen critical minerals cooperation with Australia, with President Joe Biden promising to designate Australia as a “domestic source” under the Defense Production Act (DPA), allowing Australia to benefit from the $369 billion Inflation Reduction Act clean energy incentives.

A solid economic incentive exists for mutual investment between Australia and the United States in critical mineral mining, refining, and manufacturing. U.S.-Australia ties are also significant and deepening in other areas, principally in defense through the trilateral AUKUS agreement.

At the 2023 Darwin Dialogue, a one-point-five track dialogue with representatives from the US, Japan, and Australia, a clear message emerged for the way forward. Australian, Japanese, and American governments and industry leaders must work together to develop viable, competitive alternative critical mineral markets that offer products through supply chains secure from domestic policy disruptions and economic coercion.

Beijing’s bullying of Philippines a test of Aussie mettle

Last weekend, China’s Coast Guard and maritime militia carried out dangerous and aggressive manoeuvres against a small Philippines boat, blocking and blasting it with a powerful water cannon.

The vessel was trying to resupply a remote Philippines armed forces garrison on Second Thomas Shoal, in the South China Sea’s Spratly Islands, within the Philippines undisputed Exclusive Economic Zone.

This brazen escalation by China is a test for the Albanese government’s readiness to speak up in defence of the international rules-based order, and to show support for a key security partner in Southeast Asia­ – a region Can­berra has identified as critical to Australian interests.

At the AUSMIN meeting last week in Brisbane between Australian and US defence and foreign ministers, our two nations committed to upholding a “global order based on international law” and “fundamental principles of sovereignty and territorial integrity”.

They expressed their “strong opposition” to destabilising actions in the South China Sea, including “the dangerous use of coast guard vessels and maritime militia”. They specifically denounced China’s excessive maritime claims as inconsistent with international law and reaffirmed their support for the landmark 2016 arbitral tribunal award in The Hague, which found in favour of the Philippines in its maritime legal dispute against China.

Washington reacted swiftly to the incident at Second Thomas Shoal, issuing a clear condemnation of China’s actions, simultaneously reassuring Manila and warning Beijing that any escalation to an armed attack on Philippines government vessels would be covered under the US-Philippines Mutual Defence Treaty. This was consistent with Defence Secretary Lloyd Austin’s June commitment to the 2016 arbitral tribunal ruling at the Shangri La Dialogue when he stated: “It is ­legally binding, and it is final.”

By contrast, Canberra has so far refrained from issuing a statement from either the Foreign Affairs or Defence portfolios. The Australian ambassador to Manila did tweet concern about “dangerous and destabilising” actions but, unlike her US counterpart, did not name China.

AUSMIN communiques are important, but they tend to be general and not widely read. The test was always going to be holding specific actions to account. The longer this official reticence about China is maintained, the more it calls into question Australia’s willingness to live up to its rhetoric on the South China Sea when the Philippines has unambiguously been on the receiving end of bullying and intimidation by Beijing.

It is to the Albanese government’s credit that bilateral relations with China have improved and tensions have reduced. But the formulation of “co-operating where we can and disagreeing where we must” is not sustainable if the policy means trying to reduce tensions by ignoring differences. This doesn’t deter Beijing’s destabilising actions; it emboldens them.

If Australia does not strongly call out such a provocative and destabilising breach of international law, one has to wonder what constitutes an issue on which we “must” disagree with Beijing. Consistency is vital in international relations. In this case, it would both demonstrate Australia’s commitment to the rules-based order and signal to all countries, including China, what actions we consider unacceptable. The danger of choosing what “must” be dealt with on an ad hoc basis, rather than by principle, is the same diplomatic error that led major European powers to think a default of silence and inconsistent engagement in the face of Russia’s aggression would eventually lead Russia’s Vladimir Putin back to the straight and narrow.

International rules either mean something or they don’t. In the valid attempt to reduce regional tensions, signing onto communiques that few read while failing to speak up when it matters most risks reducing trust in both Australia and the multilateral system.

We stood up for the Philippines in 2016 when the tribunal ruled against Beijing, and we should do so now. This is a core issue for Manila. Less than a month ago, Philippines Foreign Secretary Enrique Manalo thanked the US and Australia for their support on the 2016 arbitral award. The Philippines has become one of Australia’s most important defence partners in the region. It was among the first to support AUKUS and has a bilateral visiting forces agreement enabling a high level of access, including Australian surveillance flights over the South China Sea. It is not in Canberra’s interests for Manila to doubt the strength of Australia’s commitment.

Failing to hold Beijing to account for maritime breaches would be another mistake in the mould of the misjudgment to end our World Trade Organisation case against Beijing’s punitive tariffs on Australian barley. Abandoning the case spared Beijing the indignity of another adverse international legal ruling that would have deterred Beijing and held it to account on economic coercion. It would also be a mistake to leave the condemnation to the US, as that serves Beijing’s strategic narrative that the issues at stake are only about great power competition and US containment of China. We are all competing to shape the world in which we want to live – it is not a struggle limited to the US and China. Australia has a vital role by demonstrating that regional stability requires all nations to contribute.

Australia doesn’t have to fight every battle. But to win a competition, you have to play in it. The law-and-order principles set out in the AUSMIN communique go to the heart not just of our security and sovereignty, stretching from the seabed to space, but to the collective security of our region. If that isn’t worth standing up for, what is?

Why Japan-Australia alliance needs new strategic edge to do some ‘heavy lifting’

Strategically, Japan and Australia have more in common than just about any two nations – to the extent that we are allies in all but treaty status. Australia wants – and in fact needs – that relationship to get even closer.

Both nations need to be participants in the strategic competition that is firmly under way. We cannot afford to ignore it as something that is the exclusive business of the US and China. And the key foundation for the next stage of our partnership must be technology co-operation because critical technologies are fundamental to that strategic competition.

The relationship was not always on this trajectory. While for many years Japan has been finding ways to manage Beijing’s increasing assertiveness, Australia until around 2017 remained fixated on China as an economic silver bullet, taking us down a path of market concentration, economic dependency and security vulnerability. We found it easier to pursue Japanese whaling than we did Beijing’s cyber attacks, militarisation of the South China Sea or covert influence of domestic and international institutions. But partly in response to China’s increasingly aggressive behaviour across the past decade, Japan and Australia have drawn closer together.

Our shared interests and values and our strong desire to keep the Indo-Pacific free, open and resilient required nothing less. Countries – even strong economies and democracies such as Japan – cannot face and counter economic coercion, cyber attacks and disinformation campaigns alone. Hence a new phase of co-operation and partnership is under way.

Both countries have recognised the importance of India and embraced the revitalisation of the Quad grouping. When the US pulled out of the Trans-Pacific Partnership, it was our two countries that kept it together. And in Tokyo and Canberra there is a recognition that our bilateral relationship should be comprehensive: being about people, economics, security and defence.

We can continue these gains of recent years by working together on the challenge of technology co-operation. Technology sits at the heart of strategic competition in the sense that it is driving unprecedented change to economies, security, individual lives and international relations. The countries – or coalitions of countries – that gain pre-eminence in these technologies and set the international standards for these critical fields will gain an enormous strategic advantage.

Japan is a technologically advanced country that recently has unveiled plans for a 10 trillion yen ($107bn) national endowment fund to boost research and innovation through its top universities. As the Australian Strategic Policy Institute’s own research has shown, it performs strongly in some key areas relevant to the AUKUS partnership, including quantum and hypersonics. Our Critical Technology Tracker also shows, however, that China is leading the world in high-impact research in 43 out of 51 technology fields relevant to defence. Beijing’s investment in critical technologies relevant to national security has been of a scale that no individual nation – not even the US – can confidently match it. This is the logic behind the AUKUS partnership. As ASPI’s tracker shows, we can remain competitive if we work together.

AUKUS pillar two – which serves as an accelerator for development of critical capabilities related to hypersonics, AI, quantum and other advanced technologies – has a much greater chance of success if we make it inclusive, not exclusive. We should therefore encourage Japan and others to participate as appropriate.

This is in fact a huge development opportunity: for partnerships, for technology, for capability, for deter­rence and for a more stable and secure world.

The Japanese government has committed to a dramatic increase to its defence spending commitments. But, as with Australia’s own investments, this increase is not about creating instability and increasing the risks of conflict; rather about bolstering deterrence to avoid war and improve regional stability. Stability doesn’t mean an absence of difference or compet­ition. It means living with and managing tension, not thinking it can be ignored.

This is why deterrence is mandatory for stability: it doesn’t prevent differences or competition or even some low-level conflict, but it does help prevent those from escalating into greater conflict or war. Technological superiority and partnerships together make the most potent recipe for deterrence based on strength.

Moreover, authoritarian regimes including Beijing are expertly filling the gap between war and peace with strategically targeted economic coercion, cyber-enabled theft and disinformation and, as we have seen this month, dangerous military intercepts on the seas and in the skies.

Democratic countries have struggled to find adequate responses, especially collective responses. We failed to join forces to increase internet safety and security. And we failed to come together to bake security into social media. This must change as we face the next leap in technology – artificial intelligence, which is shaping up to be a revolution like no other.

Japan’s recent example of leading on economic security as hosts of the G7 set an important example for others to follow in terms of how states can work together on emerging security challenges. We need more global leadership like this and we must encourage the next G7 chair, Italy, to grasp the baton, pursuing an economic security agenda and inviting nations like Australia, South Korea and India.

We can control our destiny or abdicate responsibility and hand it to the control of others who do not have our interests at heart. It’s vital that we continue to build our relationship because a stable balance of power will take effort by all. As regional powers, Australia and Japan are in the prime position to do the heavy lifting.

Is Putin witnessing the beginning of the end?

Danish physicist Nils Bohr once said “prediction is very difficult, especially if it’s about the future”. The insurrection launched by Wagner boss Yevgeny Prigozhin at the weekend lasted a little over 24 hours. But the serious implications of these events must now be considered, with Vladimir Putin emerging from this extraordinary event much weakened.

Wagner forces moved quickly to secure control over the strategically important city of Rostov-on-Don, and advanced on Voronezh along the M4 highway, with the next stop being Moscow itself.

Prigozhin clearly had the initiative and momentum, with a core of 25,000 troops, and more support flocking to him, as his forces were welcomed into southern Russia.

Then Prigozhin surprisingly accepted a deal with Belarus’s ageing dictator, Alexander Lukashenko, which saw him end his uprising, reverse his advance – which had come to within 200km of Moscow – and accept exile in Belarus. The insurrection – and with it the immediate risk of military clashes in the streets of Moscow – appeared to be over as quickly as it had begun.

So, what are the longer-term implications of the apparent failed insurrection by Prigozhin and, more importantly, what are the potential challenges Putin now faces?

Prigozhin’s fate remains uncertain, but it’s highly unlikely he’ll retire to a villa in Belarus, after challenging Putin’s power by confronting Defence Minister Sergei Shoigu and Chief of the General Staff Valery Gerasimov. It’s more likely Putin will seek Prigozhin’s demise at some point, especially to prevent him from returning to direct Wagner.

Wagner looks likely to splinter between those men who sign contracts with the Russian Defence Ministry and those who walk away from the role, perhaps to do other mercenary work. That’s probably good news for Ukraine, because it reduces the threat it faces from what’s left of Wagner.

But the main loser – apart from Prigozhin – is Putin himself.

Putin’s image as a strong Russian leader has been weakened dramatically, even though the worst outcome for him – fighting in the streets of Moscow – has been avoided. A major armed insurrection occurred on Russian territory under his presidency, which looked to be on the verge of achieving success. Combined with the risk of looming defeat in Ukraine, this has done much to reinforce growing perceptions that Putin’s rule is ending and that he is a much diminished leader. So Putin will be determined to reverse any perception that he is weak.

Some possibilities to watch for include a purge of perceived opponents, especially anyone who was seen to show any support for Prigozhin’s insurrection. This could extend through all levels of Putin’s regime, including into the siloviki and the oligarchs – the elite of the security and intelligence community, and Russia’s super-wealthy business elite, which keep Putin in power in return for economic gain.

Putin may also adopt a tougher approach to the war in Ukraine, perhaps by announcing a national mobilisation, though that could then generate more opposition in the streets. The last thing Putin wants would be a popular uprising or a whiff of a “colour revolution” immediately after a military insurrection.

Yet Putin’s goal is to wear down western resolve in supporting Ukraine in a long war, and national mobilisation would give him a much greater chance to achieve that goal.

Expect Putin to amplify his fraudulent narrative that Russia is at war with NATO and Western states, even to the extent of trying to claim the West had organised Prigozhin’s “march for justice” and ramp up nationalist diatribe against NATO that could be accompanied with more provocative behaviour along NATO’s eastern and southern periphery.

It’s also quite likely Putin will rattle nuclear sabres again, having deployed nuclear weapons to Belarus to implicitly threaten use of tactical nuclear weapons against Ukraine or even against NATO. He needs to reinforce his image as the strongman in full control, especially given he knows Beijing is watching closely.

All this probably won’t save him if Russia is ultimately defeated in Ukraine. The insurrection may be over, but it is perhaps best seen as the beginning of the end of the Putin regime.

Is Russia headed towards a new civil war?

The leader of private military company Wagner, Yevgeny Prigozhin, has declared what amounts to an insurrection against Russia’s military leadership.

He’s now commanding a Wagner military force that has advanced into the southern Russian city of Rostov on Don, surrounding the Russian Southern Military district headquarters, and promised to march on Moscow. In response, Russian military forces in Moscow blockaded Red Square to protect the Kremlin.

The Wagner chief then reversed his extraordinary coup attempt.

These extraordinary and fast-moving developments raise some key risks and uncertainties.

If the Wagner forces gain support from the Russian military ‘rank and file’ soldiers, as opposed to Russian Ministry of Defence General Staff, it’s possible that Prigozhin’s insurrection will grow into something larger and more significant.

A march on Moscow for expanded Wagner forces would then become possible, and if the Russian General Staff, together with associated security agencies, fail to stop such a movement, the real risk of a civil war, or a military coup emerges. Events are not at that point yet, and it’s equally possible that Russian military forces will put down this insurrection, and in that outcome, Prigozhin is likely to meet his end.

However this insurrection ends – be it in civil war, a coup, or demise for Prigozhin – it highlights that Putin’s credibility is under increasing threat, and perhaps his days are also numbered.

Outside of Russia, Ukraine is likely to take advantage of any disruption to Russian military operations along their defensive lines in eastern and southern Ukraine, especially if those lines are weakened by Russian forces being redeployed to fight Wagner.

So, it’s quite possible that if the internal battles between Wagner and elements of the Russian military gather pace, the Ukrainians may see new gaps in the Russian defensive lines that they can probe, breakthrough and exploit to retake their territory.

Putin would then not only face the prospect of armed internal uprising – or even civil war – but military defeat in Ukraine. His credibility as Russian leader would be at a nadir, and other challengers could emerge from the Oligarchs and Siloviki – elites in the Russian security and intelligence community – that have up until this point, kept him in power.

Which takes us back to Prigozhin and his attempted coup attempt on Moscow.

The objective would be to remove Putin and place a successor in charge – not necessarily Prigozhin, but someone from the shadows – that would be more willing to align with hard line nationalist views of the Siloviki, and perhaps willing to undertake mass mobilisation to try to turn around the war in Ukraine in Russia’s favour.

There’s one other dimension that western states will be very concerned about. Russia is a nuclear weapons state, and any internal conflict – especially if a full-on civil war were to emerge – in a nuclear power is an extremely serious contingency.

A key concern must be ensuring positive control of nuclear forces, to make sure nuclear weapons cannot be used without authorisation. This is especially the case for tactical nuclear weapons that would be forward deployed, including in areas such as Rostov, and which may have simpler safety and arming processes than strategic nuclear forces such as silo based nuclear-armed ICBMs.

So western leaders will be carefully watching the posture and readiness of Russian nuclear forces. Given that risk it’s vital that western states send strong deterrent signals to the Putin regime to ensure that there is no temptation to consider the use of tactical nuclear weapons – be it against Ukraine, or in an internal conflict. That could turn what at the moment is a limited insurrection into a much more dangerous crisis that threatens the entire globe.