Australia can’t easily lift defence spending to a Trump-satisfying level

US President Donald Trump has called on NATO members to lift their defence spending from the current target of 2 percent of GDP to 5 percent.

‘They could all afford it,’ he said, warning that the United States would withdraw its guarantees of protection to Europe unless they paid up.

Trump has not opined on Australia’s defence spending, but, when he gets to consider AUKUS, he is unlikely to be satisfied. And there’s no easy way for Australia to lift its spending to a level that would satisfy him.

Australian defence spending was $53.3 billion in 2023–24, which was 2 percent of GDP. The Treasury expects it will reach 2.4 percent of GDP in 2027–28.

Russia, Ukraine, Israel and some Middle Eastern states are the only nations currently spending at least 5 percent of GDP on defence. (China’s data is too opaque to know.) In Europe, Poland comes closest, spending 4.7 percent of GDP this year. US defence spending is 3.4 percent of its GDP.

Trump’s 5 percent figure may be an ambit claim—a Financial Times report suggested he would settle for 3.5 percent. NATO will debate raising its target at its June summit.

For Australia, 3.5 percent of GDP would be $97 billion, about 75 percent more than was actually provided for defence in the budget.

Any increase in defence spending can be funded in three ways: increased taxation, reallocating money from other uses, or debt.

To get an additional $40 billion a year from taxation looks politically painful. To meet that target would require either a 12 percent increase in personal tax collections, a lift in the GST rate from 10 percent to 14 percent, or raising the company tax rate from 30 percent to 40 percent.

The federal government has in fact received an income boost of these dimensions, with total tax collections averaging 23.2 percent of GDP over the past five years, up from 21.6 percent in the previous five. However, this mostly flowed from the extraordinary profitability of resource companies, which will not be repeated.

It is more likely that company tax payments will fall short of treasury forecasts over the next few years as China’s appetite for iron ore and coal fades.

Australia is a low-taxing country—the US, Switzerland and Ireland are the only advanced nations taxing less—so an increase in taxation would not be ruinous to the economy.

It has been suggested Europe impose a defence tax to pay for military preparedness. Denmark scrapped a public holiday to help finance a higher defence budget. Without the immediate threat of Russia at war with a near neighbour, it would be hard to build the political support for such moves in Australia.

Reallocating existing spending looks just as difficult. Cutting social programs carries a high political cost, as the Abbott government learned with its ill-fated 2014–15 budget.

Most of the budget is locked in. There are 412 administered programs with payments governed by indexation. Many programs are driven by legislated entitlements, such as unemployment benefits, Medicare and the National Disability Insurance Scheme (NDIS).

The NDIS is an interesting example: it elbowed its way into a constrained budget on the false assumption costs would be held to $13 billion a year. Instead, it is at $46 billion this year—1.7 percent of GDP—and is forecast to rise to $93 billion, or 2.1 percent of GDP, by 2033–34.

Strong company tax revenue helped fund the NDIS without resorting to debt until this year. Deficits will increase as resource prices soften and the cost of the NDIS continues to rise three times faster than inflation.

Australia is a low-debt country. Its net debt of 29 percent of GDP compares with an advanced country average of 91 percent, so it could afford to borrow more. Poland has funded its expanded military with debt: its deficit is expected to reach a perilous 12.5 percent of GDP this year. There is pressure to ease the European Union’s debt rules to help lift defence spending.

There is an argument for borrowing to purchase assets, including defence equipment, the benefits of which will be derived long into the future. In extreme circumstances, debt forms part of the national security equation through the issue of war bonds.

But with the IMF warning that global government debt is becoming a financial powder keg, surpassing US$100 trillion this year, this may be the wrong time to seek the indulgence of financial markets.

The sorry conclusion is that there is no easy way to achieve the sort of increase in the defence budget that President Trump has in mind for US allies, including Australia.

DeepSeek’s disruption: Australia needs a stronger artificial intelligence strategy

The success of DeepSeek, a Chinese AI startup, has thrown a wrench in the middle of what many observers thought were largely American, or at least democratic, gears.

While the world seems to have been woken up by an AI surprise, DeepSeek’s breakthrough should be a timely reminder for Australia of the need to reduce consumer dependence for technology on China through a proactive and strategic approach to AI.  The Australian government should not want our public to be getting its world view from only the ‘facts’ Beijing permits.

DeepSeek’s development of ‘R1’, a highly efficient and cost-effective AI model, has sent ripples through the global tech community, challenging the perceived dominance of the US in AI and raising questions about the effectiveness of current export controls in preserving technological advantage.

DeepSeek’s R1 model represents a significant departure from conventional AI development paradigms. Reportedly twice the size of Meta’s open-source model and trainable at a fraction of the cost of US-developed models, R1 has fuelled speculation that DeepSeek may have circumvented export controls to access restricted US-made Nvidia chips.

While DeepSeek’s CEO has denied these allegations, attributing the company’s success to innovative development methodologies, he has also openly acknowledged that US export controls have inadvertently spurred his efforts to reduce China’s reliance on American technology. This statement highlights a broader trend of indigenous innovation in China, driven by a desire to achieve technological self-reliance and reduce vulnerability to external pressures. If true, it doesn’t mean the US export controls were so ineffective to be dropped, but rather that the US and its allies have more work to do.

DeepSeek’s emergence as a major player in the AI arena has profound implications for AI in Australia.

First, it challenges the prevailing assumption that US technological leadership, which has long underpinned Australia’s strategic and economic partnerships, can be taken for granted in the medium term.

Second, it shows that while export controls are a tool for maintaining technological advantage, it needs to be part of a full toolbox in an era of rapid technological diffusion and globalised innovation networks.

Third, and most importantly, it underscores the urgent need for Australia to cultivate sovereign AI capabilities. In this regard sovereignty is not going it alone, but not relying on our partners, even our great ally the US, to do all the heavy lifting. Over-reliance on China is a national security threat while overreliance on the US is national negligence. This is why in addition to Australian investment in indigenous AI capabilities, doubling down on the AUKUS partnership is required to safeguard our national interests, maintain our competitive edge, and ensure our strategic autonomy in a technology-driven world. And it is why Australia, the UK and the US made AI one of the six advanced capabilities of AUKUS Pillar 2.

Australia cannot continue the current approach of responding to each new tech development—whether it’s HikVision surveillance, TikTok data manipulation, smart car communications or the risk of AI facts delivered by the Chinese government. As such, we must adopt a comprehensive tech strategy that covers AI.

This strategy should encompass the following key elements:

—Investing in sovereign AI capabilities: Increased investment in AI research and development is essential, along with the development of a national AI strategy that prioritises areas of national interest, such as defence, cybersecurity, and critical infrastructure. This investment should focus on building a robust and resilient AI industry that can support innovation, drive economic growth, and enhance national security.

—Fostering international collaboration: In addition to AUKUS, strengthening partnerships with like-minded nations, such as Canada, Japan, and South Korea, is crucial for collaborative AI development, knowledge-sharing, and the establishment of international standards and norms for responsible AI development and deployment. Ideally groups like the Quad and the G7 plus should take this on.

—Promoting ethical AI development: Australia must play a leading role in promoting ethical AI development and ensuring that AI systems are designed and deployed in a manner that respects human rights, promotes fairness, and safeguards against bias and discrimination but that does not politically censor.

—Engaging the public: A public education campaign is necessary to raise awareness of the potential benefits and risks of AI, foster informed public discussion, and ensure that AI development and deployment align with society’s values and expectations.

As former Google CEO Eric Schmidt wrote yesterday: ‘DeepSeek’s release marks a turning point … We should embrace the possibility that open science might once again fuel American dynamism in the age of AI.’

Australia should work with the US and other partners to ensure it is our ‘open science’ and not Beijing’s closed world that is keeping the world informed. This underscores the importance of international engagement to shape the global AI landscape.

By taking a strategic approach that recognises the enormous impact that AI will have on every field, by investing in sovereign capabilities, by fostering international collaboration, and by promoting ethical AI development, Australia can navigate the AI revolution and secure its place as a leader in this transformative technological era.

Middle powers and the art of the deal

The week of Donald Trump’s return to the White House may seem like an odd time to emphasise the growing strength and agency of non-Western middle powers such as India, Brazil, Indonesia, South Africa, Nigeria, Saudi Arabia and Mexico. After all, Trump declared in his inaugural address that ‘America will reclaim its rightful place as the greatest, most powerful, most respected nation on earth, inspiring the awe and admiration of the entire world’, before announcing that the United States would ‘take back’ the Panama Canal.

But after three weeks of traveling in Asia, which included many conversations with academics, government officials, tour guides and hotel staff, it is clear that much of the rest of the world is decentring the US. Of course, many of the people I spoke to have strong opinions about the US: some admire the country and its new president, while others could barely contain their contempt. Overall, however, they were more concerned with how their own country fits into a complicated world than with what the US will or will not do.

Ironically, the Trump administration may well accelerate the shift toward a global order in which many countries feel freer to flex their muscles. In Trump’s vision of the world, he and the leaders of other great powers—those known for their nuclear, military, economic or strategic might—can determine the course of future events by cutting deals with no regard for the opinions of neighbouring states or for international rules and norms. At the same time, Trump sees very little value in fighting other peoples’ wars. He would prefer to talk loudly and brandish big tariffs, before sitting down to negotiate.

This thoroughly transactional perspective casts a different light on the sources of national power in the twenty-first century. In a world of deals, what matters most is bargaining power: the ability to compel other countries to reach agreements that serve your interests. And in such a world, it turns out that middle powers have plenty of advantages, even when they are considerably smaller, poorer and militarily weaker than traditional great powers.

In the nineteenth and early twentieth centuries, when countries could use force with impunity, power was a function of military and economic might, which in turn depended on territory and population size, the availability of natural and human resources and the ability to extract and harness them for government purposes. Great powers used their armies and markets to create spheres of influence where they could intervene almost without limit.

But in today’s world of ‘multi-alignment’, as India calls it, middle powers can reach agreements with great powers and with one another for different purposes. India can bargain with Japan, Australia and the US for enhanced security, with Russia for oil and gas, and with Singapore and other countries of the Association of Southeast Asian Nations for green energy. Trump’s mantra of America First suits the middle powers just fine, as it allows them to follow a similar model.

As the Harvard economist Dani Rodrik has highlighted, middle powers want to be able to create shifting coalitions. Many of these countries are members of BRICS+, a self-described informal group that began with Brazil, Russia, India, China and South Africa (after which the group is named). It has since expanded to include Egypt, Ethiopia, Iran, the United Arab Emirates and Indonesia, with Turkey, Thailand and Malaysia applying for membership. Above all, the organisation is a vessel for ad hoc alliances—a way for members to increase their collective bargaining power within traditional Western-led institutions.

Trade among BRICS+ members is growing fast. Moreover, the UAE, Iran and Indonesia, as well as new BRICS+ partners Nigeria and Kazakhstan, are all major or mid-size oil producers and exporters. If Saudi Arabia, which is still assessing its membership, decides to join, a sizable contingent of OPEC countries could hold meetings on the sidelines of BRICS+ summits. The question for the Kingdom, a G20 country seeking to broker important Middle East and East-West deals, is whether membership would increase or decrease its bargaining power.

Some observers dismiss BRICS+ as the twenty-first-century equivalent of the G77, a coalition at the United Nations of non-aligned countries that was created in 1964. But while the non-aligned sought power by banding together, the multi-aligned can make use of a wide range of formal and informal ties to enhance their individual or plurilateral bargaining power with the US, China, the European Union and others.

The most powerful asset in any negotiation is the ability to walk away from the table. This depends on what alternative dispute-resolution experts call a BATNA, the party’s ‘best alternative to a negotiated agreement’. Middle powers are building alternatives to agreements negotiated on what they see as Western terms.

Four years ago, former US President Joe Biden focused his inaugural speech on restoring and strengthening democracy at home and abroad. He set out to build a global democratic bloc to counter the rise of autocracy, although he modified his position over the course of his presidency to include non-democracies with which the US had to do business. Call it ‘Democracies+’.

Trump invited Chinese President Xi Jinping to his inauguration, to signal his commitment to diplomatic engagement—by which he means negotiation. This week, Trump announced his intent to be a ‘peacemaker and a unifier’, to end wars and prevent new ones from beginning. He wants above all to win, and keep winning, but through deals, not arms.

In such an environment, the hardest bargainer is king. Many countries will be eager to come to the table, bolstered by the power to walk away when the proposed deal is not to their liking. Rather than a unipolar or multipolar system, this world resembles nothing less—and nothing more—than a bazaar.

Codifying conventions on Australia going to war

Australia has codified government responsibilities to parliament when going to war.

The code is set out in a memorandum issued by the Prime Minister’s Department at the end of November.

The conventions cover decisions to deploy the Australian Defence Force in a major military operation in armed conflict overseas.

The prime minister’s profound prerogative to launch war is still unfettered. But the conventions set minimum requirements for openness and accountability to the parliament about war aims, the deployment and its legal basis. The conventions nudge at Australia’s quasi-presidential war powers, listing basic steps the executive owes parliament and the people.

The government action follows the recommendations of a report on international armed conflict decision-making by Parliament’s Joint Committee on Foreign Affairs, Defence and Trade, which pointed to ‘a clear need to improve the transparency and accountability of government decision-making’.

The memorandum affirms that deploying the ADF into armed conflict is a prerogative of the executive, flowing from section 61 of the constitution. The document notes: ‘In practice, the National Security Committee [NSC] of Cabinet exercises this power collectively to enable informed decision-making on matters of national significance.’

The code implies that cabinet practice should evolve to align more closely with the command structure envisaged in the constitution.

When John Howard was elected in 1996, he created the NSC as the peak decision-making body for national and foreign policy, a structure retained by all governments since. Unlike other cabinet committees, NSC decisions do not have to go to full cabinet for approval.

The NSC focus and habits of government meant that in deciding to go to Afghanistan and Iraq, cabinet relied on the minister’s power to direct the ADF under the Defence Act 1903. Using the Defence Act departed from the way it was done in World War II, when war was declared using the governor-general’s constitutional power as commander in chief of the military.

The new code means that future decisions to deploy the ADF to fight overseas should be made using the governor-general’s constitutional authority, not the Defence Act.

The memorandum then turns to the need to inform parliament of decisions for armed conflict, and to provide regular updates.

Within 30 days of a deployment, the government must convene both houses of parliament to deliver a statement on the conflict and open debate. The conventions call for the government to table an unclassified written statement outlining the objectives of the ADF deployment, the orders made and its legal basis.

The obligation to convene, inform and debate, is balanced by this statement: ‘Notwithstanding these practices, and consistent with long-standing policy, the Australian Government reserves the right to determine the appropriateness of disclosures with respect to questions of international law and advice on questions of legality, as well any considerations of national security or imminent threat to Australian territories or lives.’

The conventions promise regular updates to parliament on deployments to armed conflict and on military strategy.

During any active deployment of the ADF, the prime minister and the government leader in the Senate should give each house a statement on Australia’s involvement at least once a year.

At least two other times a year, the defence minister and their representative in the other chamber should deliver statements to each house to update on operations.

And the government is to brief parliamentary committees on the conduct of significant military operations.

As for military strategy, the government is to table publicly released Defence strategy documents in each house of parliament within 30 days of their publication.

All this might seem the obvious minimum in a parliamentary democracy. Yet practice has too often strayed towards the presidential rather than the parliamentary.

The norm in recent decades has been that defence white papers weren’t delivered to parliament, but released on a navy ship or in front of an air force jet; television’s needs trumped parliament. The habit-of-mind got so bad that Julia Gillard’s government did not even bother to table in parliament the 2013 Defence white paper or the 2013 National Security Strategy.

As I noted in my submission to the parliament inquiry, what a democracy demands of its parliament in conflict must be balanced against many other needs, from secrecy and security through to military imperatives.

Because the parties of government, Labor and Liberal, are united in protecting executive prerogative, no legal check is likely. Strengthening conventions is the practical way to strengthen parliament’s role in the use of Australia’s war powers.

Marine heatwaves: a rising challenge for naval warfare

We now know that rising sea temperatures will affect sonar performance, sometimes greatly affecting submarines’ ability to find ships and other submarines, and ships’ ability to find them. This leaves us wondering about the specific effects of another phenomenon: marine heatwaves, which can create large and sudden changes in temperatures.

Navies need to know how these events will affect them. It’s a high priority for research.

The effect of rising ocean temperatures on sound propagation and therefore sonar performance was revealed in a landmark study published in the Texas National Security Review in the spring of 2024. In colder waters, such as those in the North Atlantic near the Bay of Biscay, passive sonar ranges could shrink dramatically due to changes in thermal stratification and salinity. In one example for that location, detection range would fall from 60 kilometres to less than 20 kilometres. But in warmer, shallower waters in the Western Pacific, sonar effectiveness could rise, making North Korean submarines, for example, more detectable.

Marine heatwaves are defined as periods when sea temperatures exceed the seasonal 90th percentile for at least five consecutive days. Unlike gradual warming, heatwaves create sudden and intense thermal anomalies that disrupt the ocean’s thermal layers, presumably affecting acoustic wave propagation, perhaps strongly. Moreover, these events can extend to several hundred meters in depth, and their frequency has more than doubled since 1982. In fact, Australia will experience intense marine heatwaves in the years ahead, say Australian government researchers.

Thermal layers act as a natural barrier in the ocean. They reflect sound waves, somewhat protecting submarines below them from detection by sonars above. When the water warms, such as during marine heatwaves, these layers can shift unpredictably or weaken. Shallow submarines become easier to detect, for example.

Conceivably, an otherwise undetectable submarine would become detectable. From the point of view of the Royal Australian Navy, for example, it may be a Chinese submarine that can now be observed and tracked. Or it could be an Australian one that’s now tracked by a Chinese sonar—in another submarine, in a ship, or mounted on the sea floor.

Either way, navies had better find out what the effect will be.

Marine heatwaves are not just increasing in frequency; they are intensifying due to rising global temperatures and shifting climate patterns. For example, during the El Nino episode of 2015 and 2016, thermal anomalies in the western tropical Pacific reached depths of 150 metres, with deviations of up to 8.9 degrees C. These anomalies disrupted subsurface conditions for months, a phenomenon likely to recur with even greater intensity in the near future.

The Western Pacific, a location of global trade routes and intense submarine operations, is particularly susceptible.

Naval planners must account for marine heatwaves, just as they are beginning to do for gradual ocean warming. Such tools as Mercator Ocean International’s marine heatwave bulletins provide data on sea temperature anomalies. Navies use sophisticated oceanographic monitoring systems, but these are not specifically designed for predicting marine heatwaves.

Also, there is evidence that marine heatwaves at deep levels are underreported, raising doubts about the reliability of civilian prediction models.

Technological solutions are available to address some data-collection challenges. Autonomous underwater gliders equipped with thermometers and salinity sensors can provide near-instantaneous data on thermal anomalies, so their data can be used for planning before a ship or submarine enters a zone. Sensor networking and quantum sensing technologies offer promising avenues for monitoring effects of marine heatwaves on acoustic detection; operators can respond with sonar adjustment to mitigate effects.

Uncertainty over the sonar effects of marine heatwaves is amplifying strategic risks: operations plans may prove to be ineffective during marine heatwaves, or the other side’s operations may become suddenly and unexpectedly more effective.

The study of marine heatwaves will require a multidisciplinary approach, combining climate science, oceanography and military strategy. The result will be, first, an understanding of the events and their effects then, second, adaptation of technologies and tactics to cope with them.

DeepSeek is a modern Sputnik moment for West

The release of China’s latest DeepSeek artificial intelligence model is a strategic and geopolitical shock as much as it is a shock to stockmarkets around the world.

This is a field into which US investors have been pumping hundreds of billions of dollars, and which many commentators predicted would be led by Silicon Valley for the foreseeable future.

That a little-known Chinese company appears to have leapfrogged into a neck-and-neck position with the US giants, while spending less money and with less computing power, underscores some sobering truths.

First, the West’s clearest strategic rival is a genuine peer competitor in the technologies that will decide who dominates the century and, second, we need to step up our efforts to become less not more reliant on Chinese technology.

More than any other single field, AI will unleash powerful forces from economic productivity through to military capabilities. As Vladimir Putin said in 2017, whoever leads in AI ‘will become the ruler of the world’.

Marc Andreessen, the influential Silicon Valley entrepreneur and venture capitalist, called the DeepSeek announcement a ‘Sputnik moment’ and ‘one of the most amazing and impressive breakthroughs’ in AI. The United States was shocked into action by the Soviet satellite, Sputnik, investing billions into a public-private sector partnership model that helped win back and sustain tech dominance that would play a major role in winning the Cold War.

Andreessen is right but, in many ways, this breakthrough is even more consequential than Sputnik because the world’s consumers are increasingly reliant on China’s technology and economy in ways we never were with the Soviets.

So what does the West need to do now? Above all we need to stop underestimating our major strategic competitor. If hundreds of billions of dollars isn’t enough investment, we either need to redouble our efforts or work more smartly, bringing governments and the private sector together, and working across trusted nations, as we’re doing with AUKUS security technologies—one of which is of course AI.

We also need to dramatically step up so-called derisking of our economies with China’s in these critical technology fields.

When our leaders say they want us to have consumer choice including Chinese-made tech products, they are ignoring the considerable risks of future Chinese dominance, given we have seen the way Beijing is prepared to use its economic power for strategic purposes, whether through 5G or critical minerals.

As it stands, Beijing will have control over the majority of our smart cars, our batteries, the news our public gets through social media and, if models such as the open-source DeepSeek are adopted cheaply by Western companies, the supercharging power that AI will bring to every other sector.

DeepSeek’s breakthrough should actually come as less of a surprise than the stunned market reaction has shown.

In 2015, China told the world its aim was to supplant the US as the global tech superpower in its Made in China 2025 plan.

At ASPI our research in our Critical Technology Tracker has been showing for almost two years that Chinese published research is nipping at the US’s heels.

It surely isn’t a coincidence that at the end of 2024 and the early weeks of 2025, Beijing has shown the world its advances in both military capability in the form of new combat aircraft, and now dual-use technology in AI. Simultaneously we see Beijing’s obsession with keeping Americans and all Westerners hooked on TikTok, which ensures its users see a Beijing-curated version of the world.

Some observers are arguing that the DeepSeek announcement shows the ineffectiveness of US restrictions on exports of advanced technology such as Nvidia’s advanced chips to China.

Far from backing away from such protective measures, the Trump administration should consider stepping them up, along with further investments in data centres—already under way through the Stargate project.

Restricting chips to China is still an important tool in the US toolkit—it’s just not a panacea.

As Donald Trump’s reportedly incoming tech security director, David Feith, argued last year, the US should also target older chips because ‘failing to do so would signal that US talk of derisking and supply chain resilience still far outpaces policy reality’.

It’s not certain how much direct support DeepSeek and its backers have received from the Chinese government but there are some clues in the way the company is behaving. The DeepSeek model is open-source and costs 30 times less for companies to integrate into than US competitors.

Founder Liang Wenfeng has been blunt that the company is not looking for profits from its AI research, at least in the short term—which would enable it to follow the Chinese playbook of undercutting competitors to create monopolies. And the firm had reportedly been stockpiling the most advanced Nvidia chips before the US restrictions, and has received allocations of chips apparently through the Chinese government.

These facts hint at the lopsided playing field China likes to create. As Edouard Harris, of Gladstone AI, told Time magazine: ‘There’s a good chance that DeepSeek and many of the other big Chinese companies are being supported by the (Chinese) government, in more than just a monetary way.’

While the West continues to debate the balance between fully open economies and national industrial and technology strategies with greater government involvement, China has already fused its industry with its government-led national strategy and is evidently stronger for it.

China sees the West’s open economies as a vulnerability through which it has an easy access to our markets that is not reciprocated.

DeepSeek is yet another reminder that China’s technology is a force to be reckoned with and one that its government will use strategically to make China more self-sufficient while making the rest of the world more dependent on China.

We must start recognising this era and responding decisively.

To regulate cyber behaviour, listen to Indo-Pacific voices

The international community must broaden its understanding of responsible cyber behaviour by incorporating diverse perspectives from the Indo-Pacific, a region critical to the future of global cyber governance.

As the mandate of the United Nations Open-Ended Working Group on the security and use of information and communications technologies ends in July 2025, the world must reflect on what it means to be a responsible state actor in cyberspace. Over two decades, the UN has developed a framework of responsible state behaviour in cyberspace, which includes the acceptance that international law applies to state conduct in cyberspace and a commitment to observe a set of norms.

The framework, designed to address the weaponisation of cyberspace, narrowly focuses on high-stakes security concerns. While its emphasis on international peace and security is essential, this high threshold often sidelines domestic responsibilities and the challenges that developing and emerging economies face.

By amplifying the voices of mature cyber nations, it overlooks regions where the concept of responsible cyber behaviour is less expressed but no less important. As cyberspace is a cornerstone of economic, social, political, and military activities globally, we must expand the framework to address both domestic and international dimensions of cyber norms.

A report issued today and co-edited by ASPI and the Royal United Services Institute highlights this gap by examining how seven Indo-Pacific countries—Cambodia, Fiji, India, Indonesia, Japan, Pakistan and Taiwan—perceive responsibility in cyberspace. We investigate how governments and societies interpret this responsibility, going beyond their expectations of other states to see how they demonstrate their responsibility internally.

Our findings reveal a lack of common understanding and implementation of the UN’s cyber norms across the region. While commitments to responsible state behaviour are formally acknowledged at the UN level, domestic policies and regulations are inconsistent. For many Indo-Pacific countries, responsible cyber behaviour is mainly understood in terms of ensuring state sovereignty and territorial non-interference through cyber means. Governments are also mainly guided by national security concerns. This information is often shrouded in secrecy, complicating oversight and accountability.

Economics also shapes regional cyber policies. For most Indo-Pacific countries, socio-economic development, digitalisation and connectivity are top priorities. Given their limited sovereign cyber and digital capabilities, they view responsible behaviour as the ability to freely choose strategic partners and attract investments, technical support and capacity-building initiatives. This pragmatic approach underscores the need to reconcile international commitments with domestic priorities such as combating cybercrime, achieving data sovereignty, and ensuring affordable and reliable connectivity.

However, pursuit of these priorities often results in over-regulation and reliance on surveillance technologies and restrictive policies to counter cyber threats. Many Indo-Pacific countries struggle to balance protection of critical infrastructure and the information environment with promotion of open and inclusive digital spaces. Our report highlights the need for clear guidelines on the purchase, sale and use of dual-use technologies. While some countries adhere to international frameworks, others lack robust safeguards, exposing cyber vulnerabilities.

The Indo-Pacific’s diverse perspectives on responsible cyber behaviour emphasise the importance of domestic expertise. Governments must nurture talent within both public and private sectors and ensure access to international platforms that foster collaboration and knowledge-sharing. Otherwise, the region risks being left behind in shaping global cyber governance. Furthermore, many Indo-Pacific stakeholders argue that the UN framework’s emphasis on international norms must be complemented by actionable standards addressing states’ internal responsibilities, such as securing their networks and fostering resilient digital ecosystems.

International discussions on cybersecurity are increasingly polarised, with major powers vying for influence over Indo-Pacific countries to shape regional norms. In this context, we must ensure that the perspectives of emerging economies are not overshadowed by the interests of major powers. Ignoring these viewpoints is not only a poor diplomatic strategy—risking the alienation of regional actors and complicating negotiations—but also undermines international efforts to address shared challenges. Incorporating these voices into the framework would create a more inclusive and representative system that fosters equity, trust and long-term cooperation, ultimately strengthening global cybersecurity.

To achieve this, international and regional institutions must prioritise capacity-building and technical assistance tailored to the needs of Indo-Pacific countries. This includes creating platforms that allow these states to share experiences and shape global discourse on cyber norms. An example of such a platform is the Association of Southeast Asian Nations, through which member states have come to develop a norms checklist. It also requires the international community to recognise the interconnectedness of domestic and international cyber responsibilities. By grounding discussions in the specific contexts and priorities of the Indo-Pacific, the framework can evolve into a truly global standard that bridges the gap between developed and developing nations.

As the UN Open-ended Working Group mandate’s deadline approaches, we must reshape the framework of responsible state behaviour in cyberspace. The Indo-Pacific’s challenges and perspectives can help strengthen the framework’s relevance and effectiveness. By incorporating diverse regional viewpoints, the international community can build a more equitable and resilient cyberspace that serves the interests of all states, not just the most powerful. This is not merely a matter of inclusion; it is a matter of global cyber stability and security.

Trump at Davos

It is Donald Trump’s world now. Nowhere was this more obvious than at the World Economic Forum’s latest annual gathering in Davos. Since the 1970s, the WEF has been an integral part of the liberal international order that emerged from the ashes of World War II. It is where the world’s political and economic elites come together to discuss global risks and explore solutions to collective challenges such as climate change, rising inequality and the rise of artificial intelligence. In this sense, the 55th Davos summit was a continuation of a longer-running tradition.

And yet, nothing about this year’s gathering was normal, because it coincided exactly with Trump’s second inauguration as president of the United States. Trump’s return to the White House marks the start of an anti-Davos age. Gone is any sense of a global order in which countries pursue joint solutions to shared problems. We are entering a ‘polyworld’ governed by polycentrism, polycrisis and polysemy (when a word or symbol has multiple meanings).

A polycentric world lacks not only a single order but also any desire to create one. The US’s new secretary of state, Marco Rubio, made the administration’s position clear in his confirmation hearing: ‘The postwar global order is not just obsolete; it is now a weapon being used against us.’ And notwithstanding what Chinese leaders tell global gatherings, they are not in the order-building business either. When Chinese President Xi Jinping speaks of ‘great changes unseen in a century’, he is not referring to the emergence of a Chinese-led world. Rather, he is instructing Chinese society to prepare for a long period of chaos and disruption.

Moreover, Trump’s desire to upend the global order is surprisingly popular around the world. The European Council on Foreign Relations has just conducted a poll showing that most people around the world welcome Trump with open arms. They believe he will be good for the US, good for their own countries and conducive to world peace. They like the idea of the US becoming a normal power.

No longer can we expect middle powers such as India, Brazil, Turkey, Indonesia or South Africa to shore up a single US-centred order. In the polycentric world, each of them thinks of itself as a serious power—as a centre, rather than as part of the periphery. The only countries that are nervous about Trump are the US’s closest allies in Europe and Asia, since they have long based their own security and prosperity on the notion of US exceptionalism.

The second feature of the moment is the polycrisis. Climate change, new technologies, demographic trends and the shifting nature of capitalism will create continuous disruptions. But unlike single acute crises (like a financial collapse), the polycrisis will not foster unity or a desire for common rules. Instead, the multitude of simultaneous challenges will generate competition for attention; climate will have to compete with migration, Gaza with Ukraine and so forth.

The upshot is a fragmented world of different tribes with different priorities. As the crises worsen, each will inevitably be weaponised in ways that lead to further fragmentation. Since the first thing that happens in a crisis is a suspension of rules, the rule-based order will give way to a perpetual state of exception.

The third feature is polysemy. The new crises are taking us into unknown territory, not least because they are interacting with one another in complex and unpredictable ways. Everyone will believe what they want to believe. How can we agree on rules and norms when we no longer agree on basic facts?

The defining global challenge is no longer to combat disorder, because a state of disorder implies some common agreement on what order should look like. What we have instead is unorder: the very idea of order has been overtaken by events.

In a private meeting at Davos, I heard one political leader advise others to chill out and not feel obliged to respond to all of Trump’s talk of tariffs and territorial expansion. Rather than organising the global resistance to Trump, most are looking for ways to advance the WEF’s globalist goals in the context of the new polycentric world. But now that Trump is starting to implement his policies in earnest, we will see if the Global South’s enthusiasm for his presidency lasts.

Trump won’t mean the end of Davos. Business and political leaders will continue to gather there long after he has gone. But the liberal international order of which the WEF was a pillar is unlikely ever to return to its postwar form. The agenda there—and at the United Nations, the International Monetary Fund, the World Bank and other institutions—will need to be revised accordingly.

Trump’s trade and economic security agenda: what we know so far

President Donald Trump’s trade and economic security team is united and ready to use tariffs, export controls and enhanced sanctions to strengthen the US economy and achieve geostrategic outcomes against US adversaries. Those objectives range from preserving the US technology edge over China to stemming the flow of fentanyl pre-cursors into the United States and forcing a Russia-Ukraine peace.

The team also stands ready to use these tools against US allies and partners for what the administration considers to be the greater good and for addressing trade imbalances, building up US industries, pushing up allies’ defence spending or managing immigration. Australia can take nothing for granted and must take every chance not only to demonstrate how the alliance benefits US security and prosperity but to show that hindering the Australian economy with trade measures would damage US security.

Of the slew of presidential actions and executive orders already issued, the America First Trade Policy memorandum has been one of the more detailed, with stated objectives of promoting investment, productivity, US industrial and technological advantages, defending economic and national security and benefiting US workers. It initiated more than 20 possible trade and economic security measures to address unfair and unbalanced trade.

The only surprise was that decisions on tariffs and other measures, including those relating to China, were delayed until after 1 April, to allow for detailed reviews by the Treasury, Commerce Department and the Office of the US Trade Representative. Detailed reviews are required for the use of some trade measures, those under section 232 of the 1962 Trade Expansion Act and Section 301 of the 1974 Trade Act. But others, such as those under the International Emergency Economic Powers Act of 1974 and section 122 of the 1974 Trade Act, can be imposed by presidential declaration, though sometimes only temporarily.

Trump’s trade and economic security team

For the main roles in the economic and trade team, Trump nominated Scott Bessent, a billionaire hedge fund manager, as treasury secretary; Howard Lutnick, a Wall Street trader and chief executive, as secretary of commerce; and Jamieson Greer as US Trade Representative (USTR). Greer was chief of staff to Robert Lighthizer, Trump’s first-term USTR. The Senate confirmed Bessent’s appointment on 27 January and is likely to approve the other two within days or weeks.

They appear to be in lockstep with Trump on use of tariffs, export controls and sanctions, though the degree and breadth of such measures is not settled. This contrasts with a diversity of views in Trump’s first term.

In his testimony to the Senate Finance Committee on 16 January, Bessent said the administration could raise tariffs for three reasons: to remedy unfair trade practices in a particular sector or exercised by a specific country; to raise revenue; or as a negotiating tool. Bessent strongly defended tariffs, particularly as tools for achieving deals, and emphasised that he expected the Treasury, Commerce Department and the Office of the USTR would deliver a coherent economic security agenda.

Lutnick, whose confirmation hearing before the Senate Commerce Committee is scheduled for 29 January, has actively promoted Trump’s use of tariffs as a tool to force other countries to reduce their tariffs on US goods or to generate revenue for widening domestic manufacturing.

In his testimony in May 2024 to the Congressional US-China Economic and Security Review Commission, Greer advocated expanding economic security policies implemented under the first Trump administration and the administration of president Joe Biden. That included calling for the extension of tariffs on China to include Chinese companies operating in other countries.

Also awaiting confirmation are key members of Trump’s first-term trade team. These including Kevin Hassett, former head of the White House Council of Economic Advisers, nominated as director of the National Economic Council; Russell Vought, former White House budget director and lead in the Heritage Foundation’s Project 2025, nominated to again be Trump’s director of the Office of Management and Budget; Stephen Miran, a former senior economic policy adviser at Treasury, nominated as chair of the Council of Economic Advisers; and Peter Navarro, a former trade adviser and avowed China hawk, nominated as Senior counselor for Trade and Manufacturing. This group will constitute the upper middle management of Treasury, Commerce and the Office of USTR, responsible for executing the agenda.

The America First Trade Policy in detail

According to the memorandum, the Treasury by 1 April must review US trade partners’ exchange rates and recommend ways to counter currency manipulation and other unfair trade practices. In the same time limit, it must assess risks associated with continuing exemption of imports worth less than US$ 800 from duties (currently allowed under de minimis exemption), and it must consider strengthening limits on US investment in national security technologies and products in China. Biden’s Executive Order 14105 of 9 August 2023 imposed those limits.

Also by 1 April, the Commerce Department must investigate the US deficit in merchandise (goods) trade and associated economic and national security implications, and it must recommend remedies, potentially including a global tariff and other section 232 tariffs. The department must also review and improve US anti-dumping and countervailing laws, consider revocation of US-China Permanent Normal Trade Relations and improve US-China reciprocity on intellectual property rights. To improve US economic security, the department will lead a full review of the US industrial and manufacturing base and export control system to assess whether additional barriers are needed to protect the US’s technological edge. The steel and aluminum sectors are listed.

The Office of the United States Trade Representative will have the biggest task. By 1 April, it must complete a wholesale review of countries’ trade practices, US trade agreements and sectoral agreements and propose ways to remedy unfair practices and improve market access and job outcomes for US workers and businesses.

Unsurprisingly, US trade with China is a particular focus. Foreshadowing application of tariffs and other measures, the USTR must review the US-China trade agreement to determine whether China is abiding by the agreement (it’s not, but the US isn’t fully complying, either), consider further section 301 tariffs based on an investigation started during the first Trump Administration and address any unreasonable Chinese actions that burden or restrict US commerce.

Also unsurprising is that there is no reference to consultation with US allies and partners in the America First Trade Policy memorandum. Friends get no free pass—but they never do in US trade policy. Even longtime and trusted US allies such as Australia, which has a trade imbalance that favours the US and is in the US’s primary strategic theatre, must advocate strongly to minimise the impact of foreshadowed measures.

Showing just how turbulent US trade and economic security policy could be until 2029, Trump on 26 January threatened a tariff of 25 percent and later 50 percent on Colombian imports to the US in retaliation for the US ally’s refusal to accept planeloads of its deported nationals. Colombia backed down within hours.

Since his inauguration, Trump has said that Mexico and Canada must do more before 1 February to stop fentanyl and unauthorised migrants entering the US to avoid a 25 percent tariff. China must do more to stop fentanyl to the US, via Mexico and Canada, to avoid a 10 percent import tariff, Trump has said.

In the latest development, on 27 January, Trump told House of Representatives Republicans in Miami he would add tariffs on foreign-produced ‘computer chips, semiconductors and pharmaceuticals to return production’ to the US. He also said he would be ‘placing tariffs on steel, aluminum and copper’.

This is where we are after only seven days. It will be a wild ride.

In Pacific island countries, Trump should pursue embassy transformation

The Biden administration struggled with adequately advancing US national security and foreign policy interests in the Pacific islands. The problem was that the White House failed to select the right business concept to pursue.

What is needed is not simply a strategic pivot. What is needed is a business transformation. That requires more than reform and modernisation. It requires a radical rethinking and restructuring of the core business processes of the US embassies and consulates to the Pacific island countries.

Until that happens, Washington’s foreign policy establishment will be unable to afford to compete with revisionist authoritarian powers seeking to displace US influence in the Pacific islands.

Unfortunately, such organisational change cannot be achieved overnight. Among other things, it will require new executive leadership teams, and ambassadorial confirmations for Pacific island countries are notoriously slow. However, that does not mean that the new Trump administration cannot change the status quo at US diplomatic missions in the region by the end of the first 100 days. Here are four suggestions that could help to get the ball rolling.

First, the administration should systematically assess the strategic planning of the State Department in the Pacific. As a matter of policy, each mission is supposed to create a multi-year strategic plan that declare the United States’ whole-of-government priorities in ‘a given country’.

The plain meaning of the phrase ‘in a given country’ suggests that the requirement is to produce an integrated country strategy for every independent state of concurrent accreditation. In practice, that does not always happen. For example, the US embassy to Fiji, Kiribati, Nauru, Tonga, and Tuvalu produced a single integrated country strategy for what it refers to as ‘five diverse and geographically distant Pacific Island nations’.

The Trump administration should consider providing different guidance and instructions to missions that cover multiple countries. That revision might stipulate that the mission is to produce separate integrated country strategies for each of the countries, followed by an integrated mission strategy that synthesises the individual country plans.

Second, Trump should re-evaluate the concurrent accreditation of the diplomatic staff at the US embassy in Fiji to Kiribati, Nauru, Tonga and Tuvalu. These countries span the Pacific’s cultural subregions, Fiji being part of Melanesia, Nauru and Kiribati within Micronesia and Tonga and Tuvalu forming part of Polynesia.

The Trump administration should consider restructuring the US diplomatic footprint across the region. While current arrangements may reflect logistical and resource constraints, a more strategic approach would create three subregional complexes of US embassies, consulates and consular agencies. Within each of these complexes, key business functions would be centralised to promote efficiency and thereby reduce costs.

Under this strategic approach, the Melanesian complex would be composed of the US embassies in Fiji, Papua New Guinea, Solomon Islands and Vanuatu. The Micronesian complex would be composed of the US embassies in Marshall Islands, Federated States of Micronesia and Palau. And the Polynesian complex would be composed of the US embassies in Samoa and Tonga and the US Consular Agency in French Polynesia.

Under this structure, it would make sense for the concurrent accreditation for Kiribati and Nauru to shift to the US embassy in Marshall Islands until the US embassy in Kiribati is established. Similarly, it would make sense for the concurrent accreditation for Tuvalu to switch to the US embassy in Samoa.

Third, the White House should re-evaluate the regional diplomatic posture of the US in foreign dependencies and areas of special sovereignty. In the Caribbean, the US has an independent mission for Aruba, Curacao and Sint Maarten, which are constituent countries of the Kingdom of the Netherlands. In East Asia, the US has an independent mission for Hong Kong and Macau, which are special administrative regions of the People’s Republic of China.

In the Pacific, the US recently established diplomatic relations with the Cook Islands and Niue, self-governing states in free association with New Zealand. Following these precedents, the Trump administration should re-evaluate the diplomatic terminology used to describe other foreign dependencies, areas of special sovereignty and sovereign independence movement territories across the region.

Fourth, the Office of the Inspector General of the Department of State should address the gap that exists in inspections of the US embassies in Fiji, Tonga and Samoa. Under the Foreign Service Act of 1980, the office is required to inspect every US diplomatic post at least once every five years.

Unfortunately, that requirement is rarely met in practice, thanks to waivers from the United States Congress. The most recent inspection reports for the US embassies in Fiji and Samoa were a decade and a half ago. Shockingly, that was before the US pivot to Asia ever really started in earnest.