Poland’s path to remarkable prosperity

Browsing social media, I recently came across a map showing all the countries with GDP per capita higher than Poland’s back in 1990 and in 2018. The difference was striking. While 35 years ago there were quite a few such countries, not only in Europe but also in South America, Asia and Africa, in time their number has significantly decreased. In 2018 there were no longer any South American or African states highlighted on the map.

As of 2025, the group has shrunk even further. According to data from the International Monetary Fund, Poland’s GDP in 1990 was a mere US$6690 in current dollars. By 2024 it grew almost eight-fold to US$51,630 in terms of purchasing power parity. All that in just three decades, or one generation. And it goes on. According to the European Commission’s forecast, in 2024–25, the Polish economy will be the fastest growing large economy in the European Union.

How did it happen? Apart from the hard work of our citizens, two major factors—or, to be more precise, two institutions—contributed to our economic success: NATO and the EU.

The first, which Poland joined in 1999, provided security guarantees and helped overcome decades-old division between Eastern and Western Europe. The second, which we joined five years later, took the process of easing long-standing disparities one step further. It granted new member states access to ‘cohesion funds’ and most importantly to the common European market.

After the fall of communism in Poland in 1989 and the return of messy democratic politics, despite day-to-day political squabbles one thing remained constant no matter who was in power—Poland’s determination to join the two aforementioned organisations. Why?

We are a great nation but a medium-size country. We cherish our long history—this year marks a millennium since the coronation of our first king—but our population is much smaller than that of Beijing and Shanghai combined. Poland needs allies to boost its potential on the international stage.

What’s been true for Poland—in 1990 a poor country coming out of four decades of Russian domination and economic mismanagement—might well be true for many of the middle powers in Asia, Africa and South America looking for room to grow.

These countries often need what Poland desperately needed 35 years ago and still profits from: good governance, foreign investments with no strings attached, and above all political stability, rule of law and a predictable international environment with neighbours eager not to wage wars but work together for mutual benefit. In fact, these factors can benefit every country, no matter their GDP.

Today the international order is being challenged on multiple fronts, sometimes for good reason. Decades-old institutions—including the UN and its Security Council—are unrepresentative of the global community and incapable of dealing with the challenges we face. What they need, however, is to be thoroughly reformed, not entirely rejected.

To those desperate for change, force might look appealing. It would be a mistake. Abandoning forums for international dialogue and resorting to violence will not get us far.

Take Russia’s unprovoked aggression against Ukraine. According to Kremlin propaganda, it is a justified reaction to western imperialism that allegedly threatens Russia’s security. In fact, it is a modern-day colonial war against the Ukrainian people who—just like us Poles 30 years ago—want a better life and realise they can never achieve this goal by going back to subjugation to Russia. That is what they are being punished for—an effort to free themselves from the control of a former metropolis. The Kremlin’s aggression is a desperate struggle of a failing empire to restore its sphere of influence.

A Russian victory—may it never come—would not create a more just global order. It wouldn’t benefit countries dissatisfied with where things stand now. It wouldn’t even bring about a more just and prosperous Russia. Suffice to say there are now more political prisoners in Russia than there were in the 1980s when the Soviet Union invaded Afghanistan. There are many more casualties as well.

War is hardly ever a shortcut to prosperity. Over the past millennium, Poland experienced its share of invasions and uprisings against occupying forces. What finally brought us prosperity were three decades of peace, predictability, international cooperation and political stability.

That is why on assuming the presidency of the Council of the European Union, Poland made its priority clear: security in its many dimensions, including military, economic and digital. A Europe that is safe, prosperous and open for business can benefit not only Europeans but a greater global community. Just as it benefitted Poland over the past three decades.

It may sound dull, but it worked. Just look at the numbers.

How Australia, with friends, can secure its place in critical minerals

Australia’s critical minerals sector is at a crossroads. As the United States recalibrates its industrial policies under President Donald Trump, Australia’s role in securing non-Chinese supply chains for critical minerals has never been more important.

To secure its critical minerals industry in partnership with friends such as the US, Australia must ensure US trade policies actively support its push to move up the value chain. It also needs a strategy to sustain key production during downturns, must better align critical minerals, defence and industrial policies, and it should push for stronger reciprocal investment from allies, especially in processing and refining.

While Australia is at the centre of such initiatives as the US’s Minerals Security Partnership and AUKUS, practical outcomes such as viable new supply chains depend on targeted investment and policy coherence. The 2024 suspension nickel mines in Western Australia and ongoing challenges in rare earth and lithium processing expose serious vulnerabilities. Australia risks becoming a weak link in the supply chain, rather than a strategic powerhouse.

Established in June 2022, the Minerals Security Partnership was designed to promote responsible mineral production and processing among partner countries. Joe Biden considered Australia a key part of this vision, but Trump’s return adds uncertainty. While his administration is pushing for reduced dependence on China, his inward-looking trade policies could unintentionally harm Australia’s contribution.

If tariffs extend to processed or refined critical minerals, as they cover aluminium, Australia may be discouraged from moving up the supply chain. As of 2023, Australia supplied about half of the world’s raw lithium but lacked the processing capacity to realise the material’s full value. Mineral refining remains a weak point; China dominates the sector. Australia needs investment to compete, and the US is the partner of choice. Yet Australia supplies relatively few critical minerals to the US, limiting its leverage​.

At least five Western Australian nickel mines suspended operations in 2024 due to global oversupply and falling prices. The closures resulted in major job losses and raised concerns about supply chain resilience.

Nickel is a strategic material, with uses in batteries and defence. Indonesia, the world’s top nickel producer, is aligning itself closely with China and has joined the BRICS. So declining production in Australia is a strategic misstep.

Rather than waiting for market forces to decide the fate of its nickel industry, Australia should have used its 2023 critical minerals strategy to stabilise production. More importantly, countries in the Minerals Security Partnership, particularly the US, should have stepped up and invested in Australia’s mining and processing capabilities. Friend-shoring needs to be more than just rhetoric.

Despite setbacks in nickel, Australia is making progress in rare earths. Lynas Rare Earths is expanding its processing facilities in Kalgoorlie, and Iluka Resources is developing Australia’s first fully integrated rare earths refinery at Eneabba. Federal funding supports these projects.

China controls more than 90 percent of the world’s rare earth refining. It also has used export restrictions and bans as a geopolitical tool.

Australia’s Critical Minerals Production Tax Incentive—a 10 percent tax credit for onshore processing—raises serious questions. Since Australia lacks a viable downstream industry, such as refining, alloy production, or manufacturing, these processed materials still go to China. Australian taxpayers are just subsidising the middle stage of the supply chain, only for China to capture the higher-value downstream benefits. Without a full industrial chain, this policy doesn’t create real resilience in supply; it just makes Australian critical minerals slightly cheaper for China.

Australia’s critical minerals strategy also affects its national security one. Nuclear submarines rely on more than a dozen critical minerals, including rare earths for sonar systems, cobalt for high-performance batteries and titanium for hull construction. Other advanced defence systems depend on stable critical mineral supplies.

Securing these materials requires a coordinated approach. The US, through the Defense Production Act, can prioritise domestic mining, refining and processing of key materials for defence and high-tech industries, reducing reliance on imports from potentially hostile nations. In 2024 Australia was designated as a domestic source for funding, showing the potential for deeper collaboration and greater supply chain resilience.

If the US and Britain see Australia as a long-term defence partner, they should be investing in its critical minerals sector. AUKUS should be a platform for strengthening Australia’s industrial base, including processing and refining critical minerals.

Australia’s approach to critical minerals is guided by a suite of strategic policies and documents that play a role in securing supply chains, strengthening Australia’s industrial base and strategic position, but better alignment is needed.

Closer coordination of critical minerals policy with its defence, industry and trade strategies can revitalise capacity in the industry while helping to diversify mineral supply chains away from China.

Australia can’t afford to take a passive approach. Global supply chains are shifting fast. If Australia wants to be a cornerstone of Western critical mineral security, it must act decisively and demand that its allies do the same.

The 2025 Annual Threat Assessment: ASIO makes the case for ‘national’ security

Australian Security Intelligence Organisation Director-General Mike Burgess called on Wednesday night for national security that’s truly national. Only through such a broad-ranging and joined approach across governments and society can Australia navigate the deteriorating security outlook to 2030, as assessed by ASIO.

Burgess was delivering his sixth public Annual Threat Assessment. Since he introduced them in 2020, the annual assessments have become something of a genre—deadly serious yet interspersed with humour. They present concrete facts in a circumspect but calculated way, acknowledging that adversaries are also a target audience and sometimes even addressing them directly. It’s not how the public service usually talks, and that’s by design.

From the outset, Burgess intended to use these statements ‘to move beyond the bureaucratic language of annual reports and help everyone understand the significant threats we see directed at Australia and Australians’. Since then, it’s become increasingly clear that the operative word was ‘everyone’.

Over the past six years, Burgess’ public statements have tracked the shift in ASIO’s foremost concerns, from the war on terror to the reemergence of espionage and foreign interference. At the same time, he has made the case that today’s violent extremism can’t be thought of, or fought, with concepts and methods inherited from last decade’s fight against Islamic State. As he said last year, ‘threats, circumstances, technologies and people all change’.

But a persistent through-line has been the emphasis he places on security responsibilities beyond ASIO’s walls. That’s an emphasis Burgess has deepened and extended over the years.

In 2020, he chose to underscore how ASIO’s officers are not apart from, but part of, the Australian community: ‘The point is’, he said, ‘we are you’. This time, he might well have said ‘you are us’.

The message was clear that it’s no longer appropriate to think of national security as something a security agency provides for the public. National security is something the Australian public provides for itself, and ASIO is just one, though an important one, of many ways in which the Australian public does that:

You cannot arrest your way to social cohesion. You cannot regulate your way to fewer grievances. You cannot spy your way to less youth radicalisation. In this environment, national security is truly national security—everybody’s business.

That business is unfortunately not in a downturn. This year’s assessment, as the director-general noted, was ‘the first of its kind’. In previous years he’d spoken about ‘past and present threats’; on this occasion he declassified part of a strategic outlook produced by ASIO’s Futures Team, charting broader trends out to 2030. The outlook is unpromising: more security surprises, more threat diversity and fewer effective norms to constrain state and non-state behaviour.

The future Burgess paints is one that is under pressure from great-power competition, the diffuse post-Covid-19 constellation of anti-authority grievances and ever-mutating radicalisation pathways, all accelerated by technological advances. The most confronting thing about this future is not any particular security concern, but that there may be no particular security concerns. Australia in 2030, this outlook suggests, will find it far more difficult to establish security priorities at a strategic level, readily trading emphasis on one source of threat for de-emphasis on another.

The ASIO Act includes seven ‘heads’ of security:

—Espionage;

—Foreign interference;

—Politically motivated violence (of which terrorism is a subcategory);

—Promotion of communal violence;

—Sabotage;

—Attacks on Australia’s defence system; and

—Serious threats to border integrity.

The first three, according to Burgess, are ‘already flashing red’. Excluding threats to border integrity, which he expects to remain manageable under current policy settings, the others are all trending upwards.

Burgess noted the ‘normalisation of violent protest’ following recent events in the Middle East as an example of the increasing ease with which overseas conflicts resonate in Australia as violence between, or consciously targeted at, particular communities.

He identified sabotage, a major concern in the early Cold War, as primed for a comeback. While physical sabotage never goes out of style, cyber-enabled sabotage of critical infrastructure ‘presents a more acute concern for Australia’. Meanwhile Defence, already a priority target for foreign intelligence agencies, is expected to become more so as the AUKUS submarine project matures.

Burgess argued that this security environment of ‘everything, everywhere all at once’ requires a whole-of-society—not just an ASIO—response, and urgently.

When Burgess said ‘we cannot leave our responses too late’, it was clear that the ‘we’ meant all Australians, not just those with ‘security’ in their job title.

ASIO’s outlook, as presented, doesn’t make for pleasant reading. The director-general described it as his ‘most significant, serious and sober address so far’. Indeed, he seemed less inclined to spin yarns or make wry asides than in previous years.

Fortunately for his audience, Burgess ended on a positive, rousing note.

I can assure you ASIO will use all of the tools we have available to identify and counter these threats. Our powers are significant, our capabilities are exceptional, our resolve is resolute.

Now the challenge falls to us as a nation—individuals, communities, governments and security agencies alike—to make good on ‘national’ security.

The strategic importance of the Whyalla steelworks

Australia has been losing so many sovereign manufacturing capabilities over the past two decades that it is hard to know where to draw the line. The Whyalla steel mill may mark the spot.

The Australian and South Australian governments certainly seem to think so. Prime Minister Anthony Albanese on Thursday said the two governments would spend an immediate $484 million, mainly to keep the works going during the period of administration that the South Australian government initiated on Wednesday.

And they allocated $1.9 billion for upgrading the plant when it is under a new owner. It has been owned by GFG Alliance, chaired by British businessman Sanjeev Gupta.

The machinery of the Whyalla steel works is antique, having started production in 1965, and it supplies, in a good year, only about 15 percent of Australia’s steel needs.

However, it is the only domestic source of long steel products, such as structural steel and rail. The steel billet it sends to Newcastle for rolling is the only domestic source of reinforcement bar for the construction industry.

Bluescope’s Port Kembla steelworks, by contrast, is focussed on coil, which is turned into flat products such as roofing.

Whyalla’s steel is relatively free from impurities, meaning it has strategic importance for military manufacturing, including for the Benalla munitions plant. Electric arc furnaces cannot match the quality of blast furnace steel. In addition to Whyalla, Sanjeev Gupta’s GFG Alliance controls arc-furnace steel operations at Laverton in Melbourne and Rooty Hill in Sydney.

The structural steel and reinforcement bar coming from Whyalla could all be imported—indeed last year a record 3.1 million tonnes of steel product was imported as distributors sought to manage their insecurity over Whyalla’s steel supplies. There is no alternative global producer of Whyalla’s rails, which are made to unique Australian standards.

There was no federal government intervention last year when chemical company Qenos shut down the last two petrochemical plants in Australia capable of making polyethylene, the essential ingredient for most plastic products. The plants are to be demolished to make way for industrial property development.

Australia’s only stainless steel plant was shut in 1996, the only tinplate plant in 2006 and the last aluminium rolling mills in 2014.

The motor industry, which was the most advanced integrated machinery manufacturing operation in the country, was shut down between 2015 and 2017.

Market forces have been allowed to bring the destruction of domestic manufacturing capability, with the standout exception being the Morrison government’s 2022 decision to extend subsidies to ensure the survival of the last two oil refineries, Viva in Geelong and Ampol’s refinery at Lytton in Brisbane. This followed the closure of Exxon’s Melbourne refinery and BP’s Kwinana refinery the previous year.

There was a strategic argument that Australia needed to preserve a domestic capability to make diesel fuel, even though the remaining refineries are only a fraction the size and efficiency of the plants in Singapore, South Korea and China that supply most of Australia’s needs more cheaply.

The government’s Future Made in Australia strategy for reviving Australian manufacturing has two streams: one devoted to sectors that will contribute to lowering carbon emissions, and an ‘economic security and resilience’ stream aimed at supporting sectors vulnerable to supply disruptions and that require support to unlock sufficient private investment.

The second stream looks tailor-made for Whyalla. While the federal government is presenting its rescue as a green-steel initiative, what is most urgently required is a reline of its existing coal-fired blast furnace. The technology for hydrogen-fuelled blast furnaces, which could make green steel, is not yet proven and would not be viable for Whyalla.

While government rescue finance is welcome, the plant needs a corporate saviour.  Buying the Whyalla works is probably not what Bluescope Steel has in mind for strategic diversification, although a national purchase would have political appeal. South Korea’s Posco was interested in Whyalla when the plant’s former owner got into financial difficulties eight years ago. The government may be able to use the strength of its relationship with Japan to entice an operator such as Nippon Steel into the fray.

What is disturbing is that the decision to provide support is reactive and ad hoc, as was the case with the decision to save the last two oil refineries. There is no strategy spelling out what manufacturing capabilities Australia possesses that must be preserved in the interests of sovereignty.

The Swiss resources group Glencore said late last year it would shut its Mount Isa copper mine but that its copper smelter in the town and its Townsville copper refinery would keep going with third party supplies. Should those operations become marginal, would an ability to produce refined copper be deemed strategic?

Diesel, steel and cement are arguably the most basic industrial inputs to national security, for which a domestic production capacity should be retained.

There is an interesting story about cement. In the early days of the Covid-19 pandemic, many Chinese businesses faced mandatory shutdowns and China’s exports plunged. Australian quarries providing the stones to turn cement into concrete soon found they could not get the cutting tools they relied upon, raising concerns about their continued ability to operate. There were other manufacturers in Germany, but there was also a rush on their supplies.  Chinese cutting products returned, but the episode showed that even concrete is vulnerable to trade disruption.

Whatever the arguments for retaining a domestic ability to make steel, dreams of self-sufficiency or autarky are not realistic.

How Europe can pay for rearmament

Europe urgently needs to rearm. Russia’s invasion of Ukraine, and the broader threat that President Vladimir Putin’s regime poses to Europe, requires nothing less. US President Donald Trump’s administration has also now made clear that neither Ukraine nor the United States’ NATO allies can count on continued US support. Perhaps this particularly brutal wake-up call will finally jolt European governments out of their complacency.

If so, the big question is how to finance the requisite increase in military investment at a time when Europe’s economies are weak, public finances are stretched and many voters are loath to accept cuts to other government spending. The scale of the challenge is indeed daunting. Russia’s economy is on a war footing, its army is battle-hardened, and it has a huge stockpile of nuclear weapons. Even though Europe’s economy dwarfs Russia’s, a recent report by the International Institute for Strategic Studies estimates that, after adjusting for purchasing power, Russia’s military expenditure last year (US$462 billion) was higher than Europe’s (US$457 billion).

Europe’s big powers have struggled to meet NATO’s previously agreed peacetime target of spending at least 2 percent of GDP on defence. France and Germany managed barely more than that last year, while Britain reached 2.3 percent of GDP. These figures are woefully inadequate for an age when war has returned to the continent and Europe must provide for its own security.

Trump wants NATO’s European members to raise their defence spending to 5 percent of GDP, while NATO Secretary General Mark Rutte acknowledges the need for ‘considerably more than 3 percent.’ Poland has already upped its military spending to over 4 percent of GDP, with the aim of reaching 5 percent, and other frontline states such as Estonia and Lithuania are not far behind it. Now the rest of Europe must follow suit.

But how should they finance the effort? With European economies stagnant and many Europeans struggling, governments are not keen to raise taxes or slash welfare spending. While such measures may ultimately be necessary nonetheless, the politically obvious solution for now is to borrow. This would make economic sense, too, since higher defence spending is, in fact, an investment in Europe’s future.

True, high government debts, EU fiscal rules, and domestic political constraints make increased borrowing tricky for many countries. But there are at least three options for mitigating these factors. The first is to exclude investment in defence from the bloc’s fiscal rules, which broadly limit government borrowing to 3 percent of GDP. Last year, the European Commission launched an ‘excessive deficit procedure’ against Poland, which rightly argued that its increased borrowing was necessary to protect the country—and the rest of Europe—from the heightened Russian threat.

Fortunately, European Commission President Ursula von der Leyen seems to have come around to the Polish position. She is proposing to activate the Stability and Growth Pact’s escape clause (which allows higher borrowing during crises) to permit increased defence investment. While Germany and other fiscally frugal countries have previously objected to granting such additional flexibility, that may change after the German elections on 23 February, given the country’s belated awareness of its vulnerability.

Since Germany itself has low public debt and a small budget deficit, EU fiscal rules would not prevent it from borrowing more to upgrade its feeble defences. But it is shackled by its own constitutional debt brake, which then-chancellor Angela Merkel introduced in 2009, and which the country’s powerful constitutional court aggressively enforces. Again, though, there could be greater openness to amending this measure after the election.

Fiscal rules are not the only constraint, however; so, too, are bond markets. France’s public debt already exceeds 110 percent of GDP, and its minority government has struggled to pass a budget that would trim its bulging budget deficit (6.1 percent of GDP). The country’s precarious political situation has further increased the premium that it must pay relative to German debt. Indeed, the interest rate on French debt briefly exceeded that of Greece last year.

A second option, then, is for European governments to borrow collectively to finance a one-off investment in defence capacity, as French President Emmanuel Macron has suggested. There is a precedent for this: the European Union’s €750 billion (US$782 billion) Covid-19 recovery fund. Another round of joint borrowing to the tune of €500 billion (3 percent of EU GDP) could amplify member states’ defence spending, help to rationalise European defence procurement, and potentially bolster European defence firms.

The hitch is that Hungarian Prime Minister Viktor Orban is openly pro-Putin, while four other EU countries (Austria, Ireland, Cyprus and Malta) have maintained their official neutrality vis-a-vis Russia. Moreover, fiscally frugal northern European countries have hitherto been reluctant to sanction further EU borrowing.

One potential workaround is for a coalition of willing governments to set up a special purpose vehicle separate from the EU, which could issue joint bonds backed by guarantees from participating governments. This would not only bypass recalcitrant EU members; it would also allow for participation by non-EU defence partners such as Norway and Britain. The relatively new British Labour government might find this especially attractive, given its own domestic fiscal constraints.

Finally, the third option is to expand the scope of European Investment Bank lending. While the EIB can already finance dual-use (civilian/military) projects, such as those producing drones and satellites, 19 EU governments recently suggested that it should also be permitted to finance wholly military spending, such as investments in tank and ammunition manufacturing.

However it is financed, Europe needs to rearm now. Upping defence spending to avert Ukraine’s defeat and deter broader Russian aggression is much less costly than fighting an all-out war. Otherwise, as Rutte warns, Europeans will need either to learn Russian or to move to New Zealand.

If New Zealand wants to restate terms with Cook Islands, it should step up support

New Zealand wants to renegotiate its free association agreements with Cook Islands to secure increased transparency in its foreign partnerships. To do so, New Zealand will need to step up its own support and can learn a thing or two from Australia.

Following the announcement of an agreement between the island nation and China this week, New Zealand’s foreign affairs minister, Winston Peters, on Wednesday said his country and Cook Islands needed to ‘reset’ the relationship and ‘re-state the mutual responsibilities and obligations’. He stressed that consultation and transparency was most important.

His stance seems to raise the possibility that New Zealand will seek a power of veto over Cook Islands’ agreements with other countries.

But New Zealand must be careful not to overstep when Pacific sovereignty is at stake: every Pacific island nation is entitled to engage with foreign partners, including China. But Wellington also has a right to ensure that its support to Cook Islands is not jeopardised by engagement with other foreign partners.

This week the Cook Islands government released an action plan for its comprehensive strategic partnership with China. New Zealand is uncomfortable with the Cook Islands government’s lack of consultation with Wellington before the agreement. The deal’s inclusion of cooperation around sea-bed mining, diplomatic missions, maritime cooperation and humanitarian aid must be putting New Zealand even more on edge.

The plan identifies priority areas including economic resilience, environment, cultural exchange, social well-being and regional and multilateral cooperation. It reiterates Cook Island’s commitment to its One-China policy.

Seabed mining, noted as a ‘national priority for the Cook Islands’, remains a key motivator for Cook Islands Prime Minister Mark Brown. The section on maritime cooperation also contains opportunities for cooperation on hydrography, geospatial and foreshore protection, maritime support and attendant infrastructure. This support could provide excuses for increased visits and engagement by Chinese security forces. Disaster management cooperation also strays into New Zealand’s defined role but will likely be limited by distance and emergency response times.

China already engages with Cook Islands at several regional-level forums on fisheries and foreign affairs. But the two countries now commit to bilateral ‘discussions’ before any regional meetings hosted by Cook Islands that China is to attend. China has also been supporting Cook Islands infrastructure development for years, building a court house, police headquarters, sports stadium, school and water supply network. However, not all support has earned favour, with some projects requiring substantial repairs after China’s substandard work.

The action plan notably lacks the security strings that much of the world was worried about. Although Brown promised no security deals, Wellington may still fear the slow-growing Chinese presence and influence that may accompany activities in the plan.

Brown now faces domestic upset. There was a popular protest of over 400 people in the capital (more than one in 40 people in the nation). Opposition party members have filed a motion of no confidence. They are frustrated that the deal is jeopardising the partnership with New Zealand.

In free association with New Zealand, Cook Islands is self-governing, but New Zealand assists in defence, disaster relief and foreign affairs. The 2001 Joint Centenary Declaration is a non-binding agreement to consult with New Zealand on national security issues, but Pacific security has changed dramatically in the past 20 years.

This is where New Zealand can learn from Australia’s new approach.

Over the past two years Australia has redefined competition in the region. Agreements with Nauru, Tuvalu and Papua New Guinea have given Canberra some degree of power to prevent other foreign countries from entering the same security or infrastructure space.

But it hasn’t come cheap.

In Nauru, Australia will provide $100 million in budget support over five years and ensure physical banking services in the country. Under the Nauru-Australia treaty, both countries must agree to any foreign engagement in Nauru’s security, banking and telecommunications sectors and consult on any engagement in critical infrastructure.

Similarly, in Tuvalu, the Falepili Union treaty states, ‘Tuvalu will mutually agree with Australia any partnership, arrangement or engagement with any other State or entity on security and defence-related matters’. In exchange, Australia is helping address Tuvalu’s climate threats and offering a special visa pathway.

Australia and PNG have just announced plans to restart negotiations on a treaty-level agreement. This follows Australia’s investment in a future PNG National Rugby League team.

In these agreements, Australia has highlighted the lasting value it will provide and has made it clear that foreign competition in the same space will prevent Australian support from reaching its potential.

If New Zealand doesn’t want Cook Islands engaging with China in certain sectors, including those outside traditional security, it will need to show commitment to developing those areas and delivering what Cook Islands needs. It can start by investing more in maritime security and infrastructure and addressing climate threats.

Stepping up in Cook Islands won’t solve all of New Zealand’s issues in the Pacific, with tensions still high in Kiribati and other leaders looking on cautiously. But they can at least start with taking care of their realm.

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.

Still not confident enough: China isn’t likely to move on Taiwan in 2025

Despite China’s rapid military improvements, it’s unlikely to use large-scale force against Taiwan in 2025. The Chinese leadership’s concerns over the quality of military command, economic weakening, uncertain social stability and effects of the Trump administration will likely forestall any large scale military manoeuvre.

However, China will continue to ramp up pressure against Taiwan across 2025.

On 6 January, the United States’ new defense secretary, Pete Hegseth, told the Senate Armed Services Committee he believed a Chinese Communist Party fait accompli invasion of Taiwan was the pacing risk scenario for the Department of Defense. He reminded the committee that ‘Xi Jinping has openly expressed his intention to annex Taiwan to mainland China’ and ‘has told his military to be prepared to use force to achieve such an outcome by 2027’.

Like its successes in artificial intelligence, improvements in China’s military should not be underestimated. In several areas, China’s military is now reaching standards typical of the US military. China’s navy is transforming rapidly and by the end of 2025 is expected to have 395 ships, including three operational aircraft carriers. China is also improving its amphibious fleet, acquiring assault ships that can carry large numbers of landing craft, troops, fixed wing drones, armored vehicles and helicopters. In early 2025, there were reports of China building special barges that would support Taiwan landings.

China’s military now has the largest aviation force in the region, with new fighters and stealth aircraft that expand its ability to operate farther from its shores. It is also increasing its inventory of nuclear weapons and now has the world’s leading arsenal of hypersonic missiles. The army has increased the number of troops along the Taiwan Strait and improved its firepower, mobility, and rapid strike capabilities.

Throughout 2024, China’s military and coast guard continued to exercise Taiwan invasion and blockade scenarios. In May, following the inauguration of Taiwanese President Lai Ching-te, Beijing launched large-scale military exercises, surrounding Taiwan within two days. In October, it undertook a second series of drills, taking just one day to implement a mock blockade or quarantine of Taiwan. In December, China staged its largest show of force in decades, showing the world how it could repel a foreign force approaching Taiwan.

The military has dramatically improved its ability to conduct a blockade or invasion, but Beijing will still have doubts. During the release of the 2024 China Military Power Report, senior Pentagon officials said, ‘despite its rapid progress, the force has not yet demonstrated the type and scale of sophisticated urban warfare or long-distance logistic capabilities that would likely be required for operations against Taiwan’. A lack of combat experience is a significant imposition for a force wanting to undertake complicated operations across the Taiwan Strait. Exercising will only get you so far.

Serious questions have also been asked about China’s officer corps and their ability to ‘judge situations, understand higher authorities’ intentions, make operational decisions, deploy troops, and deal with unexpected situations’. Corruption also remains an endemic issue, with China’s military experiencing a new wave of corruption-related scandals over the past two years that has led to the removal of two defence ministers and a high-ranking member of China’s Central Military Commission.

Domestic factors will also influence any decision to use military force. China is facing adverse demographic trends, including an aging population and low birth rates. There are other internal struggles, such as a trend of rising violence, following a string of indiscriminate mass attacks throughout 2024.

China is also seeking to manage a faltering economy, worsened by ballooning local government debt, a loss of investor confidence and the gradual collapse of its real estate sector. Beijing has struggled to stimulate domestic consumption, relying on its growing share of global exports to drive the economy. Researchers at Rhodium Group estimated that China’s GDP was only 2.4 to 2.8 percent higher in 2024 than a year earlier, well below official claim of  5.0 percent growth.

China’s trade surplus reached a new high of nearly US$1trillion in 2024. Beijing will be wary of the impact of a potential trade war with the United States. It will want to strengthen its trade relationships with other partners to reinforce its economy. China has already sought to recalibrate ties with Japan, India and Australia, while doubling down on its engagement with the Global South. Within this context, China will want to perform a careful balancing act over Taiwan. It will not want to damage international relationships by taking unnecessarily aggressive military actions.

Amid the problems, the leadership nonetheless probably has growing confidence that, if called upon, the military will be able to ‘resolve the Taiwan issue’. However, Xi probably hasn’t yet decided to use force against Taiwan.

2027 almost certainly remains a short-term goal for military modernisation, not a date for a Taiwan invasion. Concerns over the economy and social stability will remain as key priorities for China’s leadership.

Xi will also want to carefully assess the Trump administration’s resolve on the Taiwan issue. Trump has hinted at a more transactional approach to Taiwan, suggesting it contribute more to its own security while still supporting Taipei’s right to self-defence. Trump is already threatening tariffs on Taiwan’s semiconductors.

In 2025, China’s military will continue to undertake exercises around Taiwan as part of a broader coercion campaign against Taipei. However, the likelihood of large-scale use of force against Taiwan in 2025 remains low.

Economic cyber-espionage: a persistent and invisible threat

Economic cyber-espionage, state-sponsored theft of sensitive business information via cyber means for commercial gain, is an invisible yet persistent threat to national economies. As more states use cyber tools to secure economic and strategic advantages, a growing number of countries, particularly emerging economies, are vulnerable.

In response, G20 members agreed in 2015 that no country should engage in cyber-enabled theft of intellectual property (IP) for commercial gain.

That resulted in expectations that states could provide assurances that their cyberspace activities didn’t seek foreign IP for unfair economic advantage, that they could provide IP holders with a protective framework, and that they could attain a level of cybersecurity maturity for protection of IP-intensive sectors.

Unfortunately, the reality is different. The number of cyber operations targeting private forms has quadrupled since 2015. As technological capabilities become central to national power, states are increasingly seeking shortcuts to competitiveness. Cyber operations seemingly offer an effective and attractive means.

The shift in cyber-espionage to target emerging economies is evident in the data analysed by ASPI. Our first report, State-sponsored Economic Cyber-espionage for Commercial Purposes: Tackling an invisible but persistent risk to prosperity, noted that in advanced economies accounted for 60 percent of reported cyber-espionage cases in 2014. By 2020, that proportion had reversed, with emerging economies now bearing most campaigns.

Two follow-up reports, released today, shed light on how countries confront this growing threat. In State-sponsored Economic Cyber-Espionage: Assessing the preparedness of emerging economies to respond to cyber-enabled IP theft, we evaluated the readiness of 11 major emerging economies to counteract cyber-enabled IP theft: Argentina, Brazil, Colombia, India, Indonesia, Malaysia, Mexico, Peru, the Philippines, Thailand and Vietnam. They represent some of the fastest-growing innovative economies in the world. Many are rapidly expanding in knowledge-intensive sectors such as biotech, advanced manufacturing and digital services. However, the report’s findings are concerning.

Most countries in South Asia, Southeast Asia and Latin America don’t recognise cyber threats to innovation and knowledge sectors as a major issue. This stance is reflected at the political-diplomatic level, where no government of an emerging economy has weighed in on these threats to innovation. Indonesia, India and Brazil, during their G20 presidencies, refrained from including cyber-enabled IP theft on the forum’s agenda.

When authorities in South and Southeast Asia and Latin America have strengthened their capacities to investigate and prosecute IP theft cases, it’s been driven by efforts to achieve conformity with World Trade Organization standards. But most governments struggle to live up to expectations in terms of securing and respecting higher-end IP, particularly when cases involve trade secrets and sensitive business information and when threat actors are believed to operate from foreign jurisdictions.

While no economy is safe from the risk of economic cyber-espionage, some are likelier targets, and some are more prepared to withstand the threat. Defending against economic cyber-espionage is an exercise in matching a response posture with an ongoing assessment of an economy’s risk profile

In our second report, State-sponsored Economic Cyber-espionage: Governmental practices in protecting IP-intensive industries, we looked at measures that governments in various parts of the world have taken to defend their economic crown jewels and other important knowledge-intensive industries from cyber threats.

Most prominently, in October 2023 the heads of the Five Eyes’ major security and intelligence agencies appeared together in public for the first time. In front of a Silicon Valley audience, they called China out as an ‘unprecedented threat’ to innovation across the world. That was followed up in October 2024 with a public campaign, Secure Innovation, which mirrored similar efforts by European and Japanese governments.

But still, IP-intensive industries aren’t held to the same levels of protection and security scrutiny as government agencies or providers of critical infrastructure, despite accounting for the bulk of GDP growth, innovation and future employment.

Defending against economic cyber-espionage is complex. It involves defending against other states, or groups operating with their consent. These actors tend to be well resourced or insulated from consequences. At the coalface of those malicious cyber activities stand private and public companies—big and small—as well as research labs and universities. They’re the first line of defence against many cyber threats, including state-sponsored threat actors.

Governments can and must play an outsized role in shaping standards for making a country’s innovation ecosystem more cyber and IP secure. This involves strengthening domestic enforcement mechanisms. The issue must also be re-energising in forums such as the World Trade Organization, United Nations General Assembly and ministerial meetings under such organisations as the Quad and Association of Southeast Asian Nations. Interventions must focus on measures that prevent IP theft. After all, once IP is stolen, it’s stolen for good—along with all research and development investments made up to that point.

India has arrived

Last month, European Commission President Ursula von der Leyen announced that the first official foreign visit of the commission in her second term would be to India. On the same day, Marco Rubio held his first bilateral meeting as US Secretary of State with India’s minister of external affairs, Subrahmanyam Jaishankar. Indian Prime Minister Narendra Modi’s two-day visit to Washington last week confirmed his country’s rising international profile. The visit ended with the promise of what Modi called a United States-India ‘mega partnership’. As part of that partnership, he has committed to double trade with the US by 2030, increase oil and gas imports and expand US military sales to India.

India is the world’s most populous country, home to more than 1.4 billion people with a median age of 29.8 years, compared to 38.9 in the United States, 40.2 in China and 44.5 in the European Union. This massive and relatively young population, together with a large and fast-growing information and communications technology sector, is supporting an economic boom: India is now the fastest-growing major economy, with the International Monetary Fund forecasting a 6.5 percent increase in GDP this year. India is expected to overtake Japan and Germany to become the world’s third-largest economy by 2030.

Despite its vast potential, India has long been overlooked by the West, both economically and geopolitically. But a fundamental global realignment is now underway. The US’s unipolar moment has given way to an era of great-power competition that, unlike during the Cold War, features demands by emerging and developing economies for a more inclusive and representative multilateral system. In this multipolar age, both the US and Europe see India—a neutral foreign-policy actor and dynamic emerging economy—as vital to the future of their strategic priorities.

A founder of the Non-Aligned Movement, India has plenty of experience navigating precarious moments in world affairs. During the Cold War, it skilfully balanced its policies toward the US and the Soviet Union. When it engaged with the Soviet Union—from which it received considerable military assistance—it calibrated its approach to offset US support of Pakistan, without taking sides in the great-power competition.

India has since maintained this pragmatic balancing act, adapting its foreign policy to a shifting geopolitical landscape. Today, that means recognising its potential to shape global affairs, including by playing a leading role in building an efficient, realistic and inclusive multilateralism.

This is reflected in Modi’s pursuit of a more assertive, internationalist foreign policy. Beyond building new partnerships and strengthening old ones, Modi has sought to increase India’s influence in traditional and emerging multilateral fora. In 2023 alone, India held the presidency of both the G20 and the Shanghai Cooperation Organisation (a Chinese creation, comprising nine Middle Eastern and Asian countries).

Moreover, India plays a leading role in the BRICS, which, in addition to Brazil, Russia, India, China and South Africa, now includes Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates. India’s approach to the BRICS is characteristically nuanced: whereas Russia and, to a significant extent, China see themselves as disruptors of the existing order, India views itself as a reformer. This enables it to maintain strategic flexibility as it advances its economic and diplomatic interests.

India’s relationship with China is complicated by other factors. While the countries work together in some fora, they are also locked in protracted territorial disputes and a competition for leadership in the so-called Global South. And India’s growing global clout—including its appeal to Western powers—stems in large part from its ability to act as a counterweight to China. The India-Middle East-Europe Economic Corridor was designed as an alternative to China’s Belt and Road Initiative and reflects India’s centrality to global supply chains.

India is also indispensable to the Quad alliance with Australia, Japan and the US—a grouping that is officially focused on maritime security and economic cooperation, though its members clearly seek to provide a buffer against China in the Indo-Pacific region. It is thanks to India—a rising ‘Southern’ power—that the Quad is not viewed as just another Western vehicle.

Modi has sought to bolster India’s Southern credentials, including by highlighting its status as the ‘mother of democracy’. By framing democracy as intrinsic to Indian civilisation, rather than a colonial legacy, he has aligned India with the middle powers that are now seeking to redefine global governance on their own terms.

To be sure, India has experienced a decisive shift since Modi became prime minister in 2014. He has moved India away from the secular and pluralistic values that had flourished after independence, in favour of an assertive Hindu nationalism. So many international indices have downgraded India’s democratic status that he is now seeking to create his own.

But Modi—the second leader of independent India (after Jawaharlal Nehru) to be elected to three consecutive terms—remains a dominant force in Indian politics, as recent regional election results affirmed. And at a time of rapid geopolitical change, he is committed to leveraging his position, and India’s profound strengths, to turn India into a global player.

India has long had the potential to be an active shaper of international affairs. It has now arrived.