Tag Archive for: Port of Darwin

Trump is right to worry about China’s Panama Canal influence

Donald Trump’s foreign policy priorities are coming into sharp focus: shoring up economic security, bolstering national security and sending a clear signal to America’s allies and partners. One of those partners is Panama, a small Central American nation that happens to control one of the world’s most vital maritime passages. Of the many Trump proclamations over the past week, this is one that Australia, as a maritime nation, should pay attention too.

Built by the United States from 1904 to 1914 to connect the Atlantic and Pacific Oceans, the 82km Panama Canal now handles around 6 percent of global maritime trade and 40 percent of US container trade, underscoring its importance to both American interests and the global economy.

Heavily reliant on seaborne trade, Australia is particularly vulnerable to disruptions in global shipping routes. Even though only a small portion of its maritime trade travels through the Panama Canal, disruptions to the Panama Canal would have an impact on the price of goods in Australia, as the global supply chain would have to respond to the constriction of another key waterway.

The Reserve Bank in its August 2024 report on monetary policy noted that maritime trade freight costs had risen sharply in 2024. This was predominantly as a result of conflict in the Red Sea and a reduction in capacity of the Panama Canal due to drought.

The Reserve Bank said increased freight costs hadn’t yet translated into higher goods inflation in Australia but could if they were sustained—demonstrating the impact to disruption of maritime trade on Australia’s economy.

So, what exactly are Trump’s proclamations? He has threatened to seize back the Panama Canal, not ruling out use of force, and has claimed it’s under the control of Chinese soldiers and that Panama is gouging US ships with exorbitant transit fees.

While his claims are demonstrably false, his underlying concern is not misplaced. Maritime infrastructure is crucial to the economic and national security of countries such as Australia and the US. Australia learned this lesson too late in 2015 when it rashly leased the Port of Darwin to Landbridge, a Chinese-owned company, for 99 years. Much as Darwin is vital to Australia’s security, the Panama Canal remains critical to America’s.

The canal has been fully owned by the Republic of Panama since 1999, when the US transferred control under two treaties, one of which was a treaty of neutrality, requiring the canal to remain in neutral hands—and stating that if it did not, the US reserved the right to defend the canal with military force.

Despite the canal being under Panamanian control, companies from mainland China and Hong Kong have acquired key port facilities on both its Pacific and Atlantic entrances. On the Atlantic side, Landbridge has taken control of Margarita Island, Panama’s largest port. Meanwhile, Hong Kong-owned CK Hutchison Holdings—which wholly owns Hutchison Ports Australia, operator of terminals in Sydney and Brisbane—holds concessions to operate the ports of Balboa and Cristobal, the canal’s major Pacific and Atlantic gateways.

While CK Hutchison Holdings is Hong Kong-owned, the national security laws that were introduced in Hong Kong in 2020 could allow China to exercise influence over these ports.

China’s national security laws can require companies, including Hong Kong companies, to assist the Chinese government in in­telligence gathering and military operations.

This means that even though China does not directly control the Panama Canal, it still holds significant sway at both its Pacific and Atlantic entrances. Coupled with a major uptick in Chinese investment in Panama, underscored by Panama’s decision to join China’s Belt and Road Initiative in 2018, this port ownership provides China with a strategic foothold in the region, and specifically at ­either end of the canal.

Secretary of State Marco Rubio on Sunday demanded that Panama end the influence of the Chinese Communist Party over the canal area.

The canal area is part of a broader trend of Chinese investment in maritime trade routes, including in the Indian Ocean. Think of Bangladesh, Sri Lanka and Pakistan, to name a few. This foothold grants China significant influence over the Strait of Malacca, the Strait of Hormuz and other vital shipping lanes in the region. China has poured resources into Pacific ports, such as those in the Solomon Islands.

The point is that China is investing heavily in infrastructure that underpins global maritime trade. Under its national security laws, the companies driving these investments, some of which are state owned or have close ties to the Communist Party, could be compelled to use them for intelligence gathering or even military purposes. In the event of heightened strategic competition or conflict, these investments would allow for the targeted constriction of maritime trade to countries such as the US and Australia.

Despite Trump’s threats, it’s unlikely the US would opt to take the canal by force. But Australia should take notice. While Trump’s claims of Chinese soldiers controlling the Panama Canal are false, China’s increased control of port infrastructure globally, including at each end of the canal, should generate concern for a maritime trading nation such as Australia.

Downsides of China’s port investments go beyond immediate security risks

Chinese companies own or operate at least one port on every continent except Antarctica. These investments present more than immediate security concerns; they position China to fully exploit the economic potential of ports at the expense of other countries.

And with Chinese companies controlling development of a port, the government in Beijing can interfere in physical development of the facility, perhaps to ensure that navally useful infrastructure isn’t built.

The former and current Australian governments have been criticized for acquiescing in the Chinese company Landbridge owning a 99-year lease on Darwin Port, the commercial operation in Darwin Harbour. Criticism has focused on security concerns, such as the Chinese government possibly arranging to use the facility for military surveillance or for sabotaging it in times of tension.

But the ordinary civilian activity of a Chinese company controlling the development of ports can have negative consequences for the host nation and others. As is seen in many industries, one Chinese business will often prefer to work with another, with the result that China has maximum exposure to potential profits.

We saw a step towards this last month in relation to Darwin Port, the commercial operation in Darwin Harbour. As the ABC reported, Port of Darwin signed a memorandum with the Port of Shenzhen for ‘friendly cooperation’. The aim is to increase trade links between the ports, which would have to mean Chinese companies, such as shipping lines, deepening economic involvement in Darwin Port.

Situated in southern China, the Port of Shenzhen is one of the busiest and fastest-growing in the world.

Interestingly, this agreement was not announced in Australia, and after the ABC reported it there was no public discussion of new links to China by the commercial port in one of Australia’s most strategically important harbours.

The Council on Foreign Relations has been tracking China’s growing maritime influence through investments in strategic overseas ports and has reported that while China has limited overseas naval bases, it has emerged as a leading commercial power with considerable economic influence over international sea lanes and commercial ports. China’s shipping routes and service networks span major countries and regions worldwide, backed by 70 bilateral and regional shipping agreements with 66 nations.

In October 2023, the Department of the Prime Minister and Cabinet finalised a review into the circumstances of the Darwin Port lease, finding that a robust regulatory system would manage risks to critical infrastructure, that existing monitoring mechanisms were sufficient, and, as a result, that the government did not need to cancel or vary the lease.

But the review appears not to have addressed the problem that decisions about development of Darwin Port are now in non-Australian hands. In particular, Australia does not seem to have considered that the Chinese government now exerts influence over capital investment at Darwin Port.

Warships use civilian wharves and other port facilities as well as naval bases, especially during conflict, just as military aircraft can fly from civilian airfields. Some port facilities suit naval ships and their missions better than others.

The Chinese government can exert influence on a Chinese company operating abroad and even take coercive action against Australian companies, as experienced by the Lynas Corporation in Western Australia. If the Chinese armed forces take an interest in a foreign port’s capacity to support naval operations, they can certainly send a message to its Chinese owner about what improvements should not be made there, even profitable improvements.

The 2024 National Defence Strategy and associated spending plan, the Integrated Investment Program, did not expressly mention the Darwin Port, but the importance of logistics facilities in Darwin was implied by funding allocated for enhancing theatre logistics and improving fuel holdings, storage, and distribution in northern Australia.

As China continues to deepen its geoeconomic footprint, addressing the potential risks associated with foreign control over critical infrastructure becomes increasingly important. Transparent communication and proactive policy decisions are crucial to preventing national assets from becoming leverage points in broader regional power dynamics.

Budget funding doesn’t make up for lack of a coherent Darwin Port strategy

If you’re confused about what’s happening with the Port of Darwin after last week’s federal budget and the media coverage that followed, you’re not the only one.

It’s always a challenge to penetrate the veil of Canberra’s budget uncertainty and doublespeak, especially when it comes to both defence and northern Australia. It takes a lot to decipher whether a government infrastructure announcement in northern Australia is new money, a reannouncement of an existing commitment or a reallocation of resources to new investment.

On 31 March, The Australian newspaper’s Ben Packham wrote about a $1.5 billion allocation for ‘new port infrastructure, such as a wharf, an offloading facility and dredging of the shipping channel’, that he’d found buried in the budget.

Defence Minister Peter Dutton fuelled media speculation that afternoon when he hinted that support for this investment through defence projects could allow the Australian Defence Force and US military to bypass the Port of Darwin, which is under a 99-year lease to Chinese-owned company Landbridge Australia.

Finance Minister Simon Birmingham didn’t help by suggesting early in the day that the investment was for a new port, before later confirming it was about new infrastructure.

So, is Darwin getting a second port? No.

The Northern Territory government, with industry and the Australian government, is trying to accelerate the development of Middle Arm in Darwin Harbour. The Middle Arm sustainable development precinct will centralise the territory’s export and energy industries, focusing on low-emissions technologies, renewable hydrogen and carbon capture and storage.

The $2 billion in funding announced in the 2022–23 federal budget is a key enabler for the NT government’s plan for the Middle Arm precinct. As Packham noted, the bulk of that money ($1.5 billion) will be spent on new port infrastructure to boost the region’s importing and exporting ability. In addition, $200 million will go to further develop the precinct, delivering enabling infrastructure such as a rail spur and a new road network to strengthen supply chains. The remaining $300 million will support production in Darwin of low-emissions liquefied natural gas and clean hydrogen and associated carbon capture and storage infrastructure.

The Middle Arm precinct’s strategic location provides direct access to Darwin Harbour. It is to be connected to the territory’s logistics network, including road and rail. The project has been recognised as nationally significant, is on the infrastructure priority list and could unlock more than $16 billion of private investment.

But it is most definitely not a second port.

So has the defence minister secured the investment necessary to ensure Darwin has sufficient infrastructure to support defence and national security contingencies? Not yet.

The development could provide Defence with access to new infrastructure. But it still doesn’t address the ADF’s or the US military’s needs, especially for new amphibious capabilities and fuel security.

In 2020, Defence cancelled its proposed ‘roll-on, roll-off’ wharf in Darwin. And we are yet to hear the details of what will happen next.

In September 2021, the US government awarded a tender to construct a $270 million fuel storage facility in Darwin to support US defence operations in the region. The new 300-megalitre facility will be owned and operated by Florida company Crowley Government Services. But an unresolved problem is that liquid fuels arriving in Darwin bound for this facility must pass through the Chinese-leased port.

The NT government’s much-anticipated ship lift and marine industry park will provide the much-needed scalable industry base to support future operations. However, it will still be adjacent to Darwin Port.

In no uncertain terms, US and Japanese officials have made it abundantly clear that the Port of Darwin lease arrangements would never have occurred in their jurisdictions. They’ve also made it clear to Australian officials that the lease impacts their current and future force posture decisions in northern Australia. Defence released its review of the leasing decision, which supports its previous advice that there are no problems with it. In the meantime, we wait for a decision from the National Security Committee of Cabinet on what ought to happen now.

Despite cancelling and delaying several projects, Prime Minister Scott Morrison and Dutton (and his predecessor Linda Reynolds) have repeatedly committed to spending $8 billion on defence capital infrastructure works over the next decade in the Northern Territory. While this kind of guaranteed investment is welcomed by the NT, it shows a commitment to spending but not a strategy.

The challenge isn’t just about ending the lease of the Port of Darwin or spending more in northern Australia. It’s about the development of a coherent and comprehensive strategy for the future of Darwin Port that’s guided by Australian interests.

Today, everyone seems to have a plan for Darwin’s port and harbour: the NT government, Defence, the US government, gas plant operator Inpex, port lessee Landbridge and the broader private sector. And as we saw last week, many of those plans have very real budgets. However, there’s little evidence to suggest that the various ambitious visions are shared, let alone aligned.

So, has the government found a way to ensure that Australia, not a Chinese-owned private company, is guiding the future of Australia’s most economically and strategically important northern port? In short, the answer is a resounding ‘no’. This needs to change.

The Strategist Six: Chen Yonglin

Image courtesy of Wikimedia Commons.

Welcome to The Strategist Six, a feature which provides a glimpse into the thinking of prominent academics, government officials, military officers, reporters and interesting individuals from around the world.

1. What do you believe are China’s intentions in Australia and the near region and do you believe China poses a threat to Australia?

China’s short term goal is to drive a wedge between Australia and the United States so that Australia doesn’t stand with the US if there’s a war across the Taiwan Strait. Its long term goal is to ensure Australia continues to supply high-grade minerals for its economic growth. China has run out of resources and it’s now a hungry dragon. The potential for mining the seabed is huge and that’s why China’s in conflict with neighbours such as Japan over the Senkaku Islands and with the Philippines over the Spratly Islands. Australia is the nearest major Western democracy and is considered the weak link in the Western camp. China is increasingly belligerent and Australia is fat meat with weak strength.

2. How will China go about this?

China’s strategic plan includes systematically infiltrating Australia which was its experimental first target for expanding soft power abroad. Beijing uses pro-communist Chinese community organisations as a base from which to radiate into society. It has set up groups to strengthen control over the Chinese community, to infiltrate Australian society and to oppose measures like sanctions by Western countries after the Tiananmen Square massacre. Such organisations can monitor and orchestrate the activities of Chinese students through the embassy in Canberra or the consulate-general.

3. China is Australia’s main trading partner and it would seem that China could obtain almost any raw materials it wants without coercion. Why does it think that’s necessary?

China’s leaders take a long-term view and most Australian politicians are always worried that China will stop buying Australian resources. Beijing has achieved its basic strategic goal of persuading Australia that it relies on China, not vice versa.

4. What did you personally experience as an embassy official that concerned you about China’s intentions in Australia and the region?

In 1999, while in the Ministry of Foreign Affairs, I drafted China’s Ten-year Diplomatic Strategy on the Oceania and South Pacific Region. China saw the ‘historical opportunity’ of 20-year economic growth while the US and other Western economies declined.

China started to focus on Australia strategically in 2001 when three RAN ships sailed through the Taiwan Strait. That shocked Chinese leaders. Intelligence indicated that Australia was moving its focus away from China and Asia and that it planned to join a North American Free Trade Zone. Chinese leaders decided in 2002 to let Australia become the sole supplier of LNG for Guangdong Province instead of contracting BHP in Indonesia even though it offered a much cheaper price. That proved very effective and reinforced China’s view that it could use its economic influence to weaken Australia’s alliance with the US. Then, China began to heat up relations with Australian through reciprocal official visits intended to build personal relationships and influence with Australian leaders

In February 2005, Vice Foreign Minister Zhou Wenzhong convened a meeting of high ranking diplomats in the metal screened room of the Chinese Embassy. Plans were made for visits to Australia by the Chairman of the National People’s Congress—Mr Wu Bangguo in May 2005 and Premier Wen Jiabao in 2006—and for President Hu Jintao to attend the Sydney APEC summit. Their Australian counterparts were invited to visit in exchange.

5. Do you still stand by the claim you made in 2005 that China had over 1,000 agents and informers here? What is that attitude of those given sanctuary in Australia after Tiananmen Square in 1989?

For China, every citizen is an intelligence collection asset. There’s a huge Chinese secret service network of 300–500 professional agents in Australia reporting to the PLA’s General Staff Headquarters, the Ministry of State Security, the Ministry of Public Security and the embassy. Then there are 500–700 external ‘informers’ in Chinese community and student organisations and language, academic and charity organisations.

The PLA’s General Staff Headquarters generally doesn’t intervene in political matters but in ‘counterterrorist activities’, there’s some crossover. (All Uyghur groups are labelled as terrorist). Agents often have close contacts with wealthy figures who’ve migrated here.

The General Staff focuses on collecting military and strategically important data. The State Security Ministry focuses on counter-espionage and collecting data including personal information about politicians and details of key technology. Public Security encourages Chinese in Australia to cooperate through threats of kidnapping or ‘voluntarily returning to China’ under its ‘Global Fox Hunting Operation’.

Australia’s push to ratify its extradition treaty with China is increasing fears in the immigrant community. The embassy has a Tibetan language speaker responsible for surveillance on the Tibetan community. After Tiananmen Square, more than 40,000 Chinese students in Australia obtained residence rights. Adding their immediate relatives, more than 100,000 Chinese became Australians. Many have intimate and diverse links with the PRC. They’ve often been ideologically trained and have a strong sense of Chinese chauvinism. Through their fear of Chinese political power and gangsters, some can be easily coerced.

6. How wise was Australia’s decision to sell a major Chinese company a 99 year lease on part of the Port of Darwin and how could China use this to disadvantage Australia or its allies?

That’s a whole human lifetime and Darwin is vital for countering attacks from the north. Australia’s natural defence barricade has been breached while China increases its heavy military presence in the South China Sea. It was a stupid decision by Australia. If Australia has no sense of protecting herself, why should the US care so much about this little brother? It proves China’s strategy towards Australia is working.

What the Australian public really think about Chinese investment in our maritime ports

In March the US State Department dropped a line to the Australian people via The Australian newspaper to let us know how fearful we are of Chinese investment. To illustrate their point, they homed in on the deal that saw Chinese company, Landbridge, acquire an 80 percent share of the lease to operate the Port of Darwin.

In the polling sponsored by the State Department, 43 percent of the public thought there was ‘a lot of risk’ to national security in the deal, while another 46 percent felt there was at least ‘some risk’. The poll’s sponsors concluded that this would ‘likely force Australians to rethink their choices of when to put national security ahead of economic gain’.

The intervention came in the middle of a Senate Inquiry into Australia’s foreign investment review processes as they relate to strategic assets.

But what exactly were the national security risks the public saw in the deal? And were these concerns unique to investment from China? According to The Australian newspaper coverage, the State Department didn’t ask.

We already knew from a 2014 Lowy Institute Poll that foreign investment in ‘airports and ports’ enjoys the lowest level of public support of any sector of the economy. To be clear: that’s foreign investment generally, not Chinese investment specifically.  

Whether the public thinks that investment from China presents a unique risk, and how the public might trade off this risk against the economic benefits from Chinese investment, hasn’t been known. Until now.

In March 2016 research by academics at the Australia-China Relations Institute (ACRI) and the Centre for the Study of Choice at UTS surveyed a representative sample of 1000 Australians on attitudes towards foreign investment in maritime ports.

In contrast to traditional opinion polling, the study took a choice modelling approach. This means that respondents were presented with foreign investment scenarios that varied according to numerous characteristics such as where the investor was from, the percentage of foreign ownership that would result, whether the foreign company investing was government-owned or privately-owned, and so on.

Respondents were then asked to choose the scenarios they preferred the most and those they preferred the least. Based on this information, a model was constructed of how preferences are formed, revealing the most important drivers of public opinion.

The research found that the two biggest factors influencing public preferences were concerns around foreign ownership and control, not where the investors were from.  

The number one factor was the share of foreign ownership in an investment deal.

Putting that finding in the context of the Darwin Port deal, the Northern Territory Government sold an 80 percent stake to Landbridge—so in line with this research, this is a likely reason for many Australians expressing concern.  

The second most important factor in public opinion was the length of the lease. Given that the NT Government leased the Port of Darwin to Landbridge for a period of 99 years, it’s easy to understand why many Australians might take issue.

Does that mean Australians view infrastructure investment from China such as that in Darwin Port in the same way as investment from other countries?

Yes and no.

The research found that investor country-of-origin ranked as the third most important determinant of preferences, and the public preferred investment from the US to China. The US State Department would be pleased with this. But they might be disappointed to learn that the Australian public were no fonder of investment from democratic India than communist China.

They might also be disappointed to hear that the preference for US investors could readily be offset by other terms of an investment deal. For example, the modelling indicated that the public would actually prefer a port investment from China that resulted in 64 percent foreign ownership to one from the US that led to a 100 percent foreign share.

Alternatively, the model results also show that the Australian public would prefer an investment from China that resulted in 75 percent foreign ownership with a lease period of 80 years, than one from the US that led to 100 percent foreign ownership for 99 years. The point to underscore is that any public concerns about Chinese investors can be offset by other factors that are deemed more crucial, such as the share of ownership and length of the lease.

Despite data from KPMG and Sydney University showing a 59.5 percent increase in Chinese investment in Australia in 2015, the Australian Bureau of Statistics says that Australia’s total two-way investment stock with the US still outweighs that with China by more than 10 times. That means there’s plenty more potential in Australia’s investment relationship with China.

It also means there will be a continual, if not larger, debate about the implications of that investment relationship as it grows. Even before the Senate Inquiry presented its final report, the Australian Government made a number of changes in the foreign investment approvals process, albeit relatively modest ones. These include the requirement that investment in state and territory assets in critical infrastructure (including marine ports) now be subject to FIRB scrutiny.

The Senate Inquiry gave voice to all manner of views on foreign investment and it’s important to have such public platforms that encourage diverse discussion.

Some argue that increased Chinese investment might be detrimental to Australian national security or even harm the ANZUS alliance. Others say it’s an economic imperative.To find out what the public really thinks about tapping that potential, it helps to ask the right questions.   

Developing a balanced perspective on Chinese investment in Australia

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The 99-year lease of Darwin’s commercial port to Chinese firm Landbridge Group marks an important chapter in Australia–China business relations. But the considerable controversy in the Australian defence community that has been generated by the lease belies an exaggerated sense of a putative Chinese threat to Australian security. It also reveals that Australian security experts misunderstand the nature and function of Chinese companies and of Chinese foreign and security policy more broadly. Here I address key issues raised by Geoff Wade’s original article and hope to place the lease in a proper perspective.

Geoff asks whether Landbridge Group can still be seen as a private enterprise given its ties to the Chinese Communist Party (CCP) and the People’s Liberation Army (PLA). But the definition of a private or a state-owned enterprise in China hinges on the firm’s sources of capital upon registration with the Chinese authority. If ties to the party are viewed as a crucial criterion, then all major Chinese firms are state-owned and none can be seen as private in the Western sense, simply because all of them have CCP organisations overseeing their political and ideological orientations. That simply reflects the political environment in which Chinese companies must operate. To use this as a key criterion for reviewing Chinese investments in Australia will always end up blocking such investments.

Few private Chinese firms have military connections. Landbridge, however, has a party branch secretary who is said to be an ex-PLA officer. Does that mean that the company is therefore a tool of the PLA for realising its strategic interests? In Australia, it’s not uncommon for retired military and intelligence officers to have senior positions in private enterprises. But does this mean that those firms have thus become the strategic arm of the Australian Defence Force? No general conclusion can be drawn before individual cases are analysed in detail, because each case is likely to be unique.

In the Landbridge case, its party secretary’s ex-PLA background may bring experiences and resources useful for the company’s commercial success. But the assumption that that person—or even the company as a whole—will prioritise loyalty to the PLA at the expense of commercial interests in making business decisions is highly questionable. Landbridge is, after all, a commercial enterprise driven by profit. Much more evidence is needed if one is to argue that it’s a tool for advancing China’s strategic interests while its commercial operations are nothing more than camouflage.

That raises another question about the relationship between Chinese firms and party control. Can the CCP control private firms to ensure that their economic operations serve national strategic interests? That overestimates the power of the party and creates an image of a behemoth of the Chinese state that doesn’t exist. There are plenty of examples where Chinese firms have created trouble for Beijing’s foreign policy. It’s even questionable to what extent the party exercises effective control over state-owned enterprises, let alone private firms.

Nevertheless, the fact that Landbridge has created a Department of Civil Defence (‘People’s Armed Militia’ is a misleading translation) worries many observers. But such departments are common among major Chinese institutions, be they firms, hospitals or universities. As Professor Zha Daojiong of the School of International Studies at Peking University recently told me, their main function is to provide policy guidance on routine security matters. In Peking University, for example, the uniformed guards checking identity documents at the university’s main gates follow instructions from the university’s Civil Defence Department. As Chinese companies’ global interests expand into troubled parts of the world, they may need to create private security forces to protect company assets. In the Chinese system, those security forces will need to be managed by the civil defence departments of those companies. But that’s very different from the PLA controlling those companies to advance national strategic interests.

A larger question from the perspective of Chinese foreign policy as a whole is whether Landbridge constitutes a Chinese deployment in its Maritime Silk Road initiative to realise regional economic domination and client dependency, weakening the Australia–US alliance along the way. It’s true that the Silk Road initiative encourages Chinese companies to go abroad and seek business deals. But it’s an initiative of economic diplomacy rather than military control. China is constructing commercial infrastructure in foreign countries and in some cases seeking access to them, but it’s not acquiring foreign military bases. It’s hard to see how the use of the Darwin port may create client dependency between China and Australia, and still harder to see how it may weaken the military alliance between Australian and the US. In the final analysis, Darwin is Australia’s sovereign territory and the federal government will always be able to take effective control of it.

Peter Jennings is right when he notes that commercial ports can have national security significance, such as espionage risks. But then, the logical conclusion of this observation is that in order to eliminate any security worry, commercial deals of this sort must never be signed. But it’s more important to find a proper balance between commerce and security. The national security implications of international commercial deals are an issue of management, and are manageable. All major governments around the world are managing issues of this kind, including China. Why would Australia be any different?

Some unease among Australian analysts about the Darwin port lease is understandable because of Darwin’s strategic value and because of the rarity of a 99-year lease in Chinese business deals abroad. Australian authorities should of course conduct due diligence and thoroughly examine the deal. But in expert commentaries, it’s unhelpful to aggregate China into a state behemoth under tight CCP control with even private firms seen as a deliberate link in Beijing’s purposeful international strategy. (It’s actually more useful to disaggregate ‘China’ since interest-group competition in national policy making is a daily affair in China now.) It’s even less helpful to generate xenophobic feelings toward Chinese investment as a result of this deal. A proper and balanced perspective is urgently needed for developing the next stage of Australia–China economic relations.

The grand strategic failures underlying the lease of Darwin’s commercial port

Darwin: Map View from Northwest

Most public discussion and media commentary—and seemingly all the political and bureaucratic dissembling—about the 99-year lease of Darwin’s commercial port continues to miss the point.

This isn’t primarily a commercial, foreign investment review or other economic issue.

Nor does it really concern potential barriers to defence force use of commercial facilities, an increased risk of foreign espionage or sabotage, or whether the Chinese company, Landbridge, has Communist Party or military connections or not.

Those latter issues are all largely manageable, although some will be difficult diplomatically and operationally.

Neither is the lease, strictly speaking, an alliance issue although the bungling about keeping the US informed is inexcusable—and highlights both the failure to think grand-strategically and consequent machinery-of-government failures as discussed below.

Given the long timeframe involved—and that the lease involves a powerful, regional and authoritarian country apparently seeking major changes to the rules-based international system—I see five key issues at stake.

There has been an utter failure to examine the matter in a mature, holistic and grand-strategic context that draws together all the Australian (and allied) sovereign-freedom-of-action implications over the next century.

A period nearly half as long again as modern Australian history since 1788 and one where strategic pressures will be fluid and perhaps turbulent.

For the first time since 1788 our major trading partner isn’t also a major ally. That poses obvious challenges in balancing national interests.

But what cannot be ignored or downplayed is that Australia’s strategic risk is particularly increased in the case of China compared to other foreign powers or sources of investment.

China has emerged as a potential and perhaps evident peer-strategic competitor to our long-time alliance partner.

More broadly, under its current undemocratic political system, it’s also ambivalent at best about supporting the rules-based international system by which Australia has thrived, especially since 1945.

Moreover, China’s current authoritarian rule poses increased risks of strategic adventurism and precludes the strategic stability safeguards of both domestic and international accountability through peacefully-negotiated agreements. Future Chinese governments could seek to divert democratic pressures domestically by resorting to belligerent nationalism.

If China was a democracy, and didn’t seek to disrupt the rules-based international system, such a 99-year lease of multi-purpose infrastructure wouldn’t raise the same strategic security consequences.

In geostrategic terms, Darwin Harbour and its city provide the only location suitable for major naval use across northern Australia, should this be necessary.

To deny or downplay that such increased use may become necessary over the next 100 years is to deny both history and any inter-generational responsibility for the security of our descendants.

Over the next 99 years, we should always avoid the strategic risk of any real or perceived overall dispute with China resulting in any form of claimed casus belli by China, particularly under its current form of government.

By not leasing the port to Chinese interests we also preclude the risk of China deeming any future change to the leasehold conditions in a way that increases strategic tensions at a time when we would most need to reduce them, or where such leasing matters might enable increased Chinese strategic coercion at such a juncture.

The best and easiest way to preclude such risks is to avoid them in the first place by not selling or leasing major strategic assets to such foreign interests.

The situation again demonstrates that major reform of our national security decision-making machinery is needed.

Not least because a Northern Territory government, narrowly focused on short-term political expediency, made a decision that affects the future strategic security of the whole country over a century, clearly without realising the long-term, detailed and broad implications. That said, they aren’t alone here as the few federal departments and agencies consulted only looked at the lease in specific and narrow silos, not holistically or in any broader strategic context.

A proper grand-strategic approach, rather than one focused on managing issues more in a day-to-day ‘strategic policy’ manner, is clearly needed to prevent further mistakes about foreign control of key national infrastructure and to improve the context and quality of public debate about such issues.

Until 1958 Australia maintained a Commonwealth war book covering federal and state responsibilities for coordinated and detailed action to forestall strategic security contingencies or manage them if they occurred.

Up to the mid-1980s, ASIO put serious effort into its designated responsibility to maintain the nation’s vital assets register covering those key parts of our national infrastructure essential to Australia’s security in the broadest sense. Both mechanisms should be modernised and reinvigorated.

If the NT Government and various federal agencies had been required to check such a register, and then consult in detail accordingly, the current dilemma over Chinese investment in Darwin’s port wouldn’t have arisen.

Finally, while the National Security Committee of Cabinet (NSC) now generally functions well, the supporting mechanisms remain inadequate in focus, co-ordination and whole-of-government composition.

The port of Darwin lease also proves that the Secretaries Committee on National Security (SCONS) is unable to provide the whole-of-government and broader strategic coordination that was generally achieved by the former inter-departmental defence committee and its supporting mechanisms—at least until the early 1970s.

As the Australia Defence Association has long argued, the NSC should be supported by a National Security Council comprising whole-of-nation participation by all relevant governmental agencies (with the states and territories represented as required), but with all the Council’s staff being seconded to avoid empire building and to reinforce its co-ordination and consultation role.

This would also allow a reconstitution of the strategic-level intelligence staff function not really undertaken by an Office of National Assessments focused only on intelligence analysis, and the futures-planning function within the Department of Foreign Affairs and Trade.