Tag Archive for: United States

British public opinion on foreign policy: President Trump, Ukraine, China, Defence spending and AUKUS

Results snapshot

President Trump

  • Britons support an open and engaged foreign policy role for the United Kingdom. In light of the re-election of President Donald Trump, 40% believe Britain should continue to maintain its current active level of engagement in world affairs, and 23% believe it should play a larger role.
  • Just 16% of Britons support a less active United Kingdom on the world stage.
  • When asked what Britain’s response should be if the United States withdraws its financial and military support from Ukraine, 57% of Britons would endorse the UK either maintaining (35%) or increasing (22%) its contributions to Ukraine. One-fifth would prefer that the UK reduces its contributions to Ukraine.

UK–China relations

  • Just a quarter (26%) of Britons support the UK Government’s efforts to increase engagement with China in the pursuit of economic growth and stabilised diplomatic relations.
  • In comparison, 45% of Britons would either prefer to return to the more restricted level of engagement under the previous government (25%) or for the government to reduce its relations with Beijing even further (20%).
  • A large majority of Britons (69%) are concerned about the increasing degree of cooperation between Russia and China. Conservative and Labour voters share similarly high levels of concern, and Britons over 50 years of age are especially troubled about the trend of adversary alignment.

Defence and security

  • When asked whether the UK will need to spend more on defence to keep up with current and future global security challenges, a clear two-thirds (64%) of the British people agree. Twenty-nine per cent of Britons strongly agree that defence spending should increase. Just 12% disagree that the UK will need to spend more.
  • The majority of Britons believe that collaboration with allies on defence and security projects like AUKUS will help to make the UK safer (55%) and that partnerships like AUKUS focusing on developing cutting-edge technologies with Britain’s allies will help to make the UK more competitive towards countries like China (59%).
  • Britons are somewhat less persuaded that AUKUS will succeed as a deterrent against Chinese aggression in the Indo-Pacific, although the largest group of respondents (44%) agree that it will.

Brief survey methodology and notes

Survey design and analysis: Sophia Gaston

Field work: Opinium

Field work dates: 8–10 January 2025

Weighting: Weighted to be nationally and politically representative

Sample: 2,050 UK adults

The field work for this report was conducted by Opinium through an online survey platform, with a sample size of 2,050 UK adults aged 18 and over. This sample size is considered robust for public opinion research and aligns with industry standards. With 2,000 participants, the margin of error for reported figures is approximately ±2.3 percentage points at a 95% confidence level. Beyond this sample size, the reduction in the margin of error becomes minimal, making this size both statistically sufficient and practical for drawing meaningful conclusions with reliable representation of the UK adult population. For the full methodological statement, see Appendix 1 of this report.

Notes

  1. Given the subject matter of this survey, objective and impartial contextual information was provided at the beginning of questions. There are some questions for which fairly substantial proportions of respondents were unsure of their answers. All ‘Don’t knows’ are reported.
  2. The survey captured voters for all political parties, and non-voters; however, only the findings for the five largest parties are discussed in detail in this report, with the exception of one question (6C), in which it was necessary to examine the smaller parties as the source of a drag on the national picture. The five major parties discussed in this report are the Conservative Party, the Labour Party, the Liberal Democrats, Reform (formerly the Brexit Party and UKIP), and the Green Party.
  3. This report also presents the survey results differentiated according to how respondents’ voted in the 2016 referendum on the UK’s membership of the European Union, their residency within the UK, their age, their socio-economic status, and whether they come from White British or non-White British backgrounds. The full methodological notes are found at the end of the report.
  4. Some of the graphs present ‘NET’ results, which combine the two most positive and two most negative responses together – for example, ‘Significantly increase’ and ‘Somewhat increase’ – to provide a more accessible representation of the balance of public opinion. These are presented alongside the full breakdown of results for each question for full transparency.

Introduction

There’s no doubt that 2025 will be a consequential year in geopolitical terms, with the inauguration of President Donald Trump marking a step-change in the global role of the world’s largest economy and its primary military power. The full suite of implications for America’s allies is still emerging, and there will be opportunities for its partners to express their agency or demonstrate alignment. For a nation like the United Kingdom, whose security and strategic relationship with the United States is institutionally embedded, any pivotal shifts in American foreign policy bear profound ramifications for the UK’s international posture. The fact that such an evaluation of America’s international interests and relationships is taking place during a time in which several major conflicts – including one in Europe – continue to rage, only serves to heighten anxieties among policy-makers and citizens alike.

Public opinion on foreign policy remains an understudied and poorly understood research area in Britain, due to a long-held view that the public simply conferred responsibility for such complicated and sensitive matters to government. Certainly, many Britons don’t possess a sophisticated understanding of the intricacies of diplomatic and security policy. However, they do carry strong instincts, and, in an internationalised media age, are constantly consuming information from a range of sources and forming opinions that may diverge from government positions.

The compound effect of a turbulent decade on the international stage has made Britons more perceptive to feelings of insecurity about the state of the world, which can be transposed into their domestic outlook. At the same time, their belief in the efficacy of government to address international crises, or their support for the missions being pursued by government, isn’t guaranteed. This creates a challenging backdrop from which public consent can be sought for the kind of bold and decisive actions that may need to be considered as policy options in the coming months and years.

This study provides a snapshot of the views of British citizens at the moment at which President Donald Trump was inaugurated for a second time. It shows a nation which, overall, continues to subscribe to clear definitions of its friends and adversaries, carries a sense of responsibility to Ukraine, and greets the rise of a more assertive China with concern and scepticism. Underneath the national picture, however, the data reveals some concerning seeds of discord and divergence among certain demographic groups and political parties. The UK Government must build on the good foundations by speaking more frequently and directly to the British people about the rapidly evolving global landscape, and making the case for the values, interests, and relationships it pursues.

Sophia Gaston

March 2025

London

An informed and independent voice: ASPI, 2001-2021

To mark its establishment in August 2001, the Australian Strategic Policy Institute has published an intellectual history of its work over two decades: An informed and independent voice: ASPI, 2001–2021.

ASPI’s mission is to ‘contribute an informed and independent voice to public discussion’. That was the vision embraced by the Australian Government in creating ‘an independent institute to study strategic policy’, designed to bring ‘contestability’ and ‘alternative sources of advice’ to ‘key strategic and defence policy issues’.

The story of how the institute did that job is told by ASPI’s journalist fellow, Graeme Dobell. He writes that ASPI has lived out what its name demands, to help deliver what Australia needs in imagining ends, shaping ways and selecting means.

An informed and independent voice covers the terrorism era and national security; the work of the Defence Department; Australia’s wars in Iraq and Afghanistan; the evolution of Australia’s strategy in the Indo-Pacific; relations with China and the US; cyber and tech; Japan, India and the Quad; Indonesia and Southeast Asia; Australia’s island arc—the the South Pacific and Timor-Leste; Northern Australia; Women, peace and security; Climate change; Antarctica; 1.5 track dialogues; the work of the digital magazine The Strategist; and ‘thinking the ASPI way’.

The submission to cabinet on ASPI’s founding said that the principles of contestability had ‘not yet been effectively implemented in relation to defence and strategic policy, despite the vital national interests and significant sums of money that are at stake’. That demand, at the heart of the institute’s creation, has been met and still drives its work.

Introduction: sometimes we will annoy you

A senior diplomat from one of Australia’s close ‘Old Commonwealth’ partners tells a story about hosting an Australian visit from his country’s defence minister, an aspiring political operator. The minister came to ASPI for a 90-minute roundtable with senior staff. Mark Thomson briefed on Defence’s budget woes—this was one of those years when financial squeezing was the order of the day, and a gap was quietly appearing between policy promises and funding reality.

Andrew Davies reported on the challenges of delivering the Joint Strike Fighter, the contentious arrival of the ‘stop-gap’ Super Hornet and the awkward non-arrival of the future submarine. Rod Lyon spoke about the insurmountable problems of Iraq and Afghanistan, the rise of the People’s Republic of China (PRC) and our own government’s foreign policy foibles. It was, like many ASPI meetings, a lively and sustained critique of policy settings. Driving back to the High Commission, a somewhat startled minister muttered to his diplomatic escort: ‘Thank God we don’t have a think tank like that back home!’

The genius of ASPI is that it’s designed to be a charming disrupter. Sufficiently inside the policy tent to understand the gritty guts of policy problems, but with a remit to be the challenger of orthodoxies, the provider of different policy dreams (as long as they’re costed and deliverable), the plain-speaking explainer of complexity, and a teller of truth to power. Well, that’s perhaps a little too grand. ASPI aims to be a helpful partner to the national security community, not a hectoring lecturer. But the institute ceases to have any value if it just endorses current policy settings: the aim is to provide ‘contestability of policy advice’. Not always easy in a town where climbing the policy ladder is the only game.

The story of ASPI’s creation has been told by several present at the creation1 and, very enjoyably, by Graeme Dobell in the second chapter in this volume. With the release of the Howard government cabinet records for the year 2000, we now get to see that the National Security Committee of cabinet deliberated carefully over ASPI’s composition, charter, organisational location, geographical location and underlying purpose. The annual expenditure proposed ($2.1 million) was, by Defence’s standards, trivial even in 2000. What the government was chewing over was the sense or otherwise of injecting a new institution into the Canberra policymaking environment.

The case for a strategic policy institute was set out in a cabinet submission considered on 18 April 2000:

There are two key reasons to establish an independent institute to study strategic policy.

The first is to encourage development of alternative sources of advice to Government on key strategic and defence policy issues. The principles of contestability have been central to our Government’s philosophy and practice of public administration, but 2 An informed and independent voice: ASPI, 2001–2021 these principles have not been effectively implemented in relation to defence and strategic policy, despite the vital national interests and significant sums of money that are at stake. The Government has found in relation to the COLLINS Class Submarines project for instance, and more recently in relation to White Paper process, that there are almost no sources of alternative information or analysis on key issues in defence policy, including the critical questions of our capability needs and how they can best be satisfied. The ASPI will be charged with providing an alternative source of expertise on such issues.

Second, public debate of defence policy is inhibited by a poor understanding of the choices and issues involved. The ASPI will be tasked to contribute an informed and independent voice to public discussion on these issues.2

‘An informed and independent voice’. There couldn’t be a better description of what the institute has sought to bring to the public debate; nor could there be a more fitting title for this study of ASPI’s first 20 years by Graeme Dobell, ably assisted by the voices and insights of many ASPI colleagues.

The April cabinet meeting agreed that ASPI should be established, but the government went back to Defence a second time to test thinking about the institute’s organisational structure.

In July, the department proposed several options, including that ASPI could be added as an ‘internal Defence Strategic Policy Cell’, or operate as an independent advisory board to the Minister for Defence, or be based at a university, or be a statutory authority, executive agency or incorporated company. Having considered other possibilities, the government accepted Defence’s recommendation (endorsed by other departments) that ASPI be established as a government-owned incorporated company managed by a board ‘to enhance the institute’s independence within a robust and easy to administer corporate structure’.3

The most striking aspect of this decision is that the government opted for the model that gave ASPI the greatest level of independence. There were options that would have limited the proposed new entity, for example, by making it internal to Defence or adding more complex governance mechanisms that might have threatened the perception of independence. Those options were rejected. A decision to invite a potential critic to the table is the decision of a mature and confident government. It’s perhaps not surprising that there aren’t many ASPI-like entities. Prime Minister Howard was also keen to see that the institute would last beyond a change of government. ASPI was directed to be ‘non-partisan’, above daily politics. The leader of the opposition would be able to nominate a representative to the ASPI Council. ASPI would also be given a remit to ‘pursue alternate sources of funding and growth’, giving the institute the chance to outgrow its Defence crib.

Interestingly, the August 2000 cabinet decision to establish ASPI as a stand-alone centre structured as an incorporated company and managed by a board of directors also stated that: ‘The Cabinet expressed a disposition to establish the centre outside of the Australian Capital Territory.’4 By the time ASPI was registered in August 2001 as an Australian public company limited by guarantee, the institute’s offices were located in Barton in the ACT, where they remain to this day.

The government appointed Robert O’Neill AO as the chair of the ASPI Council, and the inaugural membership of the council was appointed in July 2001, meeting for the first time on 29 August 2001. That month, the council appointed Hugh White AO as the institute’s executive director and Hugh set about building the initial ASPI team. A fortnight later, the world fundamentally changed. Terrorist attacks on New York’s World Trade Center and the Pentagon and one unsuccessfully aimed at the White House jolted the strategic fabric of the Middle East and the world’s democracies. ASPI couldn’t have started at a more challenging time for strategic analysis.

Writing in ASPI’s first annual report, Hugh White reported that the institute in 2001–02 ‘did a small amount of work directly for government, including a substantial assessment for the Minister for Defence, Senator Hill, of the implications of September 11 for Australia’s defence’.5

ASPI’s first public report was a study by Elsina Wainwright, New neighbour, new challenge: Australia and the security of East Timor. This was followed by the first of Mark Thomson’s 16 editions of The cost of Defence: the ASPI defence budget brief 2002–03. This included a rundown of the top 20 defence capability acquisition projects. The slightly cheeky cartoon covers—state and territory seagulls pinching Defence spending chips is my favourite—didn’t start until 2003–04, but the first Cost of Defence began the trend to report Defence’s daily budget spend: $39,991,898.63. (The 2021–22 Cost of Defence records the daily spend at $122,242,739.73.)

Hugh White closed off his 2001–02 Director’s report with ‘Clearly the task of defining our role in the policy debate will take some time to complete, but we believe we have made a good start.’ It was quite a foundation year: tectonic global security shifts, challenging regional deployments, defence budget and capability analysis. ASPI’s course was set, and the rest, as they say, makes up the history that Graeme Dobell and ASPI colleagues cover in this book. Graeme’s analysis makes sense of what, to the participants, might have felt from time to time like one damned thing after another. But patterns do emerge, and they coalesce into the realisation that ASPI’s first 20 years have marked some of the most turbulent shifts in Australia’s security outlook. All of which puts, or should put, a tremendous premium on the value of strategic policy, contestable policy advice, an informed and engaged audience and a new generation of well-trained policy professionals.

ASPI today is a larger organisation working across a wider area of strategy and policy issues.

The annual report for 2019–20 lists 64 non-ongoing (that is, contracted) staff, of whom 45 were full time (22 female and 23 male) and 15 were part time (11 female and four male). The overall ASPI budget was $11,412,096.71, of which $4 million (35%) was from Defence, managed by a long-term funding agreement. A further $3.6 million (32%) came from federal government agencies; $0.122 million (1%) from state and territory government agencies; $1.89 million (17%) from overseas government agencies, most prominently from the US State Department and Pentagon and the UK Foreign and Commonwealth Office. Defence industry provided $0.370 million (3%); private-sector sponsorship was $1.241 million (11%) and finally, funding from civil society and universities was $0.151 million (1%).6

Behind those numbers is a mountain of effort to grow the institute and sustain it financially.

Think tanks need high-performing staff, and high-performing staff need salaries that will keep them at the think tank. The nexus between money and viability is absolute. Around the world, there are many think tanks that don’t amount to much more than a letterhead and an individual’s dedicated effort in a spare room at home. The reality is that building scale, research depth, a culture of pushing the policy boundaries and a back-catalogue of high-quality events and publications takes money. In the early stages of ASPI’s life, I recall the view expressed that the institute couldn’t possibly be regarded as independent if the overwhelming balance of its resources came from the Department of Defence. More recently, the charge is that the ‘military industrial complex’ or foreign governments must be the tail that wags the dog. The Canberra embassy of a large and assertive Leninist authoritarian regime can’t conceive that ASPI could possibly be independent in its judgements because, well, no such intellectual independence survives back home. ASPI must therefore be the catspaw of Australian Government policy thinking.

None of those contentions are borne out by looking at the content of ASPI products over the past two decades. There are plenty of examples (from critiques of the Port of Darwin’s lease to a PRC company; analysis of key equipment projects such as submarines and combat aircraft; assessments of the Bush, Obama, Trump and now the Biden presidencies; assessments of the Defence budget; differences on cyber policy) in which the institute’s capacity for feisty contrarianism has been on full display. In my time at ASPI, I haven’t once been asked by a politician, public servant, diplomat or industry representative to bend a judgement to their preferences. It follows that, for good or ill, the judgements made by ASPI staff, and our contributors, are their views, and their views alone. ASPI is independent because it was designed to operate that way. Its output demonstrates that reality every day.

And as you will see in these pages, ASPI has views aplenty. It became clear several years ago that the institute needed to broaden its focus away from defence policy and international security more narrowly conceived to address a wider canvas of security issues. That’s because the wider canvas presents some of the most interesting and challenging dilemmas for Australia’s national security. We sought to bring a new policy focus to cyber issues by creating the ASPI International Cyber Policy Centre. This was followed by streams of work addressing risk and resilience; counterterrorism; policing and international law enforcement; countering disinformation; understanding the behaviour of the PRC in all its dimensions; and, most recently, climate and security.

Does ASPI’s work have real policy effect? One of the curiosities of the Canberra environment is that officials will often go to quite some length to deny that a think tank could possibly shift the policy dial. To do so might be to acknowledge an implicit criticism that a department or agency hasn’t been on its game. Changing policy is often more like a process of erosion than a sudden jolting earthquake. It can take time to mount and sustain a critique about policy settings before the need for change is finally acknowledged. And it has to be said that the standard disposition of Canberra policymakers is to defend current policy settings. That shouldn’t be too surprising: current policy settings in many cases will be the result of government decisions, and, at times, the role of the public service is to raise the drawbridge and defend the battlements. So, it’s often the case that a department’s response to the arrival of an ASPI report isn’t a yelp of joy so much as the cranking up of a talking points brief for the minister that explains why current policy settings are correct, can’t be improved upon and quite likely are the best of all possible worlds.

ASPI’s influence is therefore more indirect than that of the Australian Public Service (APS), but, as Sun Tzu reminds us, ‘indirect methods will be needed in order to secure victory.’7 The institute has some natural strengths in this approach. ASPI has the advantage of being small and flexible; it has a charter to look beyond current policy settings; it can talk to a wide range of people in and out of government to seed ideas; it can engage with the media; it allows expertise to develop because more than a few ASPI staff have stayed in jobs for years and built a depth of knowledge not necessarily found in generalist public servants who frequently change roles.

Taking a longer view, I would suggest that ASPI has indeed managed to influence the shape of policy in a number of areas. The institute has helped to create a more informed base of opinion on key defence budget and capability issues. This has helped to strengthen parliamentary and external scrutiny of the Defence Department and the ADF. ASPI is really the only source providing detailed analysis of defence spending and has helped to lift public understanding about critical military capability issues, such as the future submarine project, the future of the surface fleet, air combat capabilities, the land forces, space, and joint and enabling capabilities.

ASPI has had substantial impact on national thinking about dealing with the PRC, and that has helped at least set the context for government decision-making on issues such as the rollout of the 5G network, countering foreign interference, strengthening security consideration of foreign direct investment and informing national approaches to fuel and supply-chain security.

ASPI has sought to make policy discussions about cyber, critical and emerging technologies more informed and more accessible. The institute has offered many active, informed and engaged voices on critical international issues of importance to Australia, from the Antarctic to the countries and dynamics of the Indo-Pacific, the alliance with the US, the machinery of Defence and national security decision-making, the security of northern Australia and even re-engaging with Europe.

It’s best left to others to judge the success or otherwise of the institute. Both from the approval, and sometimes disapproval, that ASPI garners, we can see that people pay attention to the institute’s work. That’s gratifying and motivates the team to keep doing more. 

Coincidentally to ASPI’s 20th anniversary, the Australian Parliament’s Senate Foreign Affairs, Defence and Trade References Committee has been conducting an inquiry into funding for public research into foreign policy issues. In making a submission to that inquiry, I offered what I hoped was useful advice about the contours of what a notional ‘foreign policy institute’ should look like if the government wanted to promote in the field of foreign policy what ASPI seeks to do for defence and strategic policy. That led me to suggest the following seven approaches, presented here with minor edits:

  1. A foreign policy institute must be genuinely independent, with a charter that makes its core functions clear and a governance framework that supports its independence. If the Department of Foreign Affairs and Trade (DFAT) were to be the prime source of funding, it should be made clear that DFAT should not influence the policy recommendations of the institute’s work. A government-appointed council, including a representative of the leader of the opposition, should provide overall strategic direction for the institute. Any entity that is part of a larger government department will inevitably come to reflect the parent. A clear separation between the parent department and the institute is essential.
     
  2. The institute should not be part of a university, because university priorities would weaken the institute’s capacity to retain a sharp focus on public policy. The committee might like to test this proposition by seeing whether it can identify any contemporary foreign policy research outfit that is part of a university which has substantially shaped Australian foreign policy. My view is that you will search in vain. This is true in the main because universities have priorities other than shaping public policy outcomes. How universities recruit, reward and promote, what they teach and the outcomes they regard as constituting excellence are shaped towards other ends than providing contestable and implementable foreign policy.
     
  3. The institute needs scale to develop excellence. Successful think tanks—such as those at the top end of the University of Pennsylvania’s ‘Go To’ index—attract people interested in policy ideas and with lateral thinking skills and with some entrepreneurial flair. The quality of their thinking is strengthened by being able to test their ideas with colleagues and collaborate on interesting policy work. Some scale is needed to bring a group of people like that together, offering terms and conditions that allow people to develop skills over a few years. This approach stands in contrast to the instinct of some departments to offer one-off, short-term, small funding grants. In my experience, multiple ‘penny-packet’ grants become difficult for departments to administer, produce reports that lack an understanding of how public policy is really done and do not develop skills.
     
  4. The institute will need some time to establish itself. ASPI is 20, and every day is a story of how we manage the tasks of offering policy contestability, engaging with our stakeholders and sustaining ourselves financially. It took probably 15 years for an acceptance to be built in the rather tightknit defence and security community that ASPI was not simply to be tolerated but could add value and even be constructively brought into policy discussions. A foreign policy institute will take a similar amount of time to build an accepted place for itself. Hopefully, an institute would start producing good material on day one, but it will take years for such a group to be seen as a natural (indeed, essential) interlocutor in critical foreign policy discussions.
     
  5. The institute must be non-partisan, reaching out to all parts of parliament. Because foreign policy is a public policy good, it is appropriate and likely that the bulk of funding for a foreign policy institute will come from the public sector. If it is successful, the institute will survive through changes of governments, ministers and senior officials. As such, it can’t afford to be partisan in the way that many private think tanks are. That will still leave scope for engaged debate on policy options, which leads to approach number 6.
     
  6. Accept that the institute will, from time to time, annoy you. This is the price of contestability of policy advice. There is no question that ASPI has annoyed governments, oppositions and officials over the years on all manner of issues, from key bilateral relationships to defence equipment acquisitions, military operations, budgets and the rest. To advance policy thinking, it’s necessary from time to time to question existing policy orthodoxies. The test for the institute’s stakeholders is whether the value of contestable policy advice is worth the occasional annoyance. The test for the foreign policy institute will be whether the issue in question has been appropriately researched and thought through.
     
  7. A professional outfit needs appropriate funding. To succeed, a foreign policy institute needs to be able to attract a mix of staff who can be remunerated in line with their skills. As in all walks of life, one gets what one pays for. Funding of between $2 million and $3 million would set up an institute able to build some critical mass, working out of offices fitted out to an appropriately modest APS standard. The institute should have a remit to grow its funding base through its own efforts. This would be sufficient to enable a promising start to a potentially nationally important organisation.

    ASPI was designed to place the executive director position at (approximately) the level of the APS Senior Executive Service Band 3 (deputy secretary) level. Salary and conditions are determined by the Remuneration Tribunal. The executive director, on direction from the ASPI Council, determines salary levels for ASPI’s staff, who are recruited on contracts. The intent is to recruit people with the mix of policy skills and hands-on public policy experience who can realistically shape policy thinking. Government departments and agencies are, in general, willing to support staff taking positions at ASPI, using options for leave without pay from the APS. For more senior staff, the hope is that some time spent at ASPI will enhance their careers, perhaps enabling them to return to the APS with new skills and capacities. For more junior staff, the aim is to equip them with skills that will make them attractive new hires for departments and agencies.8

Of course, I was doing little more than describing the ASPI business model developed more than 20 years ago and validated through two decades of enthusiastic policy research and advocacy by many dozens of ASPI staff.

Speaking personally, it has been the privilege of my professional life to spend almost a decade as the executive director of the institute since April 2012, and a few more years before that as ASPI’s director of programs between 2003 and 2006. My commitment to the organisation comes about because of the value I believe it adds to Australia’s defence and strategic policy framework. These policy settings matter. They’re the foundation of the security of the country, the security of our people and the very type of country that Australia aspires to be. Australia would be better defended if we had more lively debates about the best ways to promote our strategic interests. ASPI has truly been a national gem in sustaining those debates.

At the core of this book is Graeme Dobell’s sharp take on the intellectual content of hundreds of ASPI research publications, thousands of Strategist posts and many, many conferences, seminars, roundtables and the like. Graeme has done a wonderful job of breathing life into this body of work, reflecting some of the heat and energy that came from ASPI staff and ASPI contributors investing their brain power into Australia’s policy interests. In these pages, you read the story of Australia’s own difficult navigation through the choppy strategic seas of the past 20 years. It’s a thrilling ride and a testament to the many wonderful people who have worked at or supported the institute.

We should all hope that ASPI reaches its 40-year and even 50-year anniversaries, because there’s no doubt in my mind that Australia will continue to need access to contestable policy advice in defence and strategic policy. The coming years will be no less difficult and demanding than the years recounted here. In fact, Australia’s future is likely to face even greater challenges. 

Never forget that strategy and policy matter. Profoundly so. That’s why ASPI matters.

Peter Jennings

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About ASPI

The Australian Strategic Policy Institute was formed in 2001 as an independent, non‑partisan think tank. Its core aim is to provide the Australian Government with fresh ideas on Australia’s defence, security and strategic policy choices.

ASPI is responsible for informing the public on a range of strategic issues, generating new thinking for government and harnessing strategic thinking internationally. ASPI’s sources of funding are identified in our annual report, online at www.aspi.org.au and in the acknowledgements section of individual publications. ASPI remains independent in the content of the research and in all editorial judgements. It is incorporated as a company, and is governed by a Council with broad membership. ASPI’s core values are collegiality, originality & innovation, quality & excellence and independence.

ASPI’s publications—including this report—are not intended in any way to express or reflect the views of the Australian Government. The opinions and recommendations in this report are published by ASPI to promote public debate and understanding of strategic and defence issues. They reflect the personal views of the author(s) and should not be seen as representing the formal position of ASPI on any particular issue.

Important disclaimer

This publication is designed to provide accurate and authoritative information in relation to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering any form of professional or other advice or services. No person should rely on the contents of this publication without first obtaining advice from a qualified professional.

© The Australian Strategic Policy Institute Limited 2021

This publication is subject to copyright. Except as permitted under the Copyright Act 1968, no part of it may in any form or by any means (electronic, mechanical, microcopying, photocopying, recording or otherwise) be reproduced, stored in a retrieval system or transmitted without prior written permission. Enquiries should be addressed to the publishers. Notwithstanding the above, educational institutions (including schools, independent colleges, universities and TAFEs) are granted permission to make copies of copyrighted works strictly for educational purposes without explicit permission from ASPI and free of charge.

ISBN 978-1-925229-67-7 (print)
ISBN 978-1-925229-68-4 (online pdf)

Funding statement: No specific sponsorship was received to fund production of this report

  1. See, for example, Kim Beazley, John Howard et al., ASPI at 15, ASPI, Canberra, October 2016, online. ↩︎
  2. Cabinet memorandum JH00/0131—Establishment of the Australian Strategic Policy Institute—Decision, 18 April 2000, online. ↩︎
  3. Cabinet decision JH00/0216/CAB—Australian Strategic Policy Institute—alternate models to establish a strategic policy research centre—Decision, online. ↩︎
  4. Cabinet decision JH00/0216/CAB. ↩︎
  5. Australian Strategic Policy Institute, Annual report 2001–2002, ASPI, Canberra, October 2002, 10, online. ↩︎
  6. Australian Strategic Policy Institute, Annual report 2019–2020, ASPI, Canberra, October 2020, online; staff numbers are on page 10; funding data is on page 154. ↩︎
  7. Sun Tzu, The art of war, translated by Lionel Giles, Chapter V, 5, online. ↩︎
  8. My submission to the inquiry is available via the internet home page of the Senate Foreign Affairs, Defence and Trade References Committee, Inquiry into funding for public research into foreign policy issues, online. ↩︎

North of 26 degrees south and the security of Australia: Views from The Strategist

North of 26° south and the security of Australia’, a new report by ASPI’s The North and Australia’s Security Program, presents a series of articles by a range of trusted and up and coming authors exploring the continued importance of Northern Australia to national security and defence strategy.

The last time real attention was paid to what our regional environment means for defence in the north of Australia was in Paul Dibb’s 1986 Review of Defence Capabilities and the 1987 Defence White Paper. Following that work, the Australian government invested billions of dollars in bases and bare base infrastructure in the north, with a real focus on the Northern Territory.

The strategic environment since then has changed dramatically.

First, regional nations continue to get richer and more capable, including in their ability to project military power within and beyond their own territories—meaning that near-region partners like Indonesia, Malaysia and Singapore are becoming more important in Australia’s security and diplomacy.

Second, great-power competition and potential conflict have returned to the forefront of world affairs. China and the US are now actively engaged in deep strategic competition and arm-wrestling over political, economic and strategic relationships and technological dominance across our Indo-Pacific region.

There are credible prospects of a major military conflict between these great powers over the next couple of decades, which, if it happens, will most likely spill beyond a bilateral conflict into a wider regional war.

Northern Australia’s dispersed critical infrastructure and primary resources remain vulnerable to traditional and non-traditional national security threats. Modern weapon systems put these resources within striking distance of conventional weapons, and they’re also susceptible to hybrid warfare strategies like that used by Russia in Ukraine.

While Australia has a long-term defence capability plan, we need to continue to test our assumptions about the defence of northern Australia and the north’s significance to national security. On paper, government has made a strong declaratory commitment to northern Australia. But there is evidence of a widening gap between declaratory policy and Defence’s activities in the North.

This report provides much needed contemporary analysis of the criticality of the North to Australia’s national security and defence.

The QDR: a future of hybrid warfare?

The latest formal statement of US defence policy, the QDR (Quadrennial Defense Review), plays down sweeping ambition in order to remain focused on the tasks immediately at hand—Iraq and above all, Afghanistan.  And it sees a future of ‘hybrid’ warfare, likely to involve a diversity of actors and to blur the traditional distinction between inter-state conflict and protracted counter-terrorist and counter-insurgency operations.  It suggests the US will be looking for more from its allies, including Australia.

The Obama administration and US strategic policy

This Policy Analysis, authored by Rod Lyon and Kellie Kayser, assesses how much change we are seeing in US strategic policy under the new administration in Washington.

President Obama has already begun a campaign to ‘renew’ American global leadership after the Bush years. He has been explicit in marking out his strategic style from Bush’s, emphasising that his presidency will be characterised by partnerships, diplomacy and engagement. But actual US strategic priorities have changed little: the Middle East, Afghanistan and Pakistan remain at the centre of US interest—alongside a rapidly-escalating global economic crisis.

Many of the issues of concern to Obama are also of concern to Prime Minister Kevin Rudd, although Canberra probably places a higher priority on Asian security concerns. The forthcoming meeting between the two leaders in Washington provides an opportunity to explore just how much ‘resetting’ of the relationship will occur on Obama’s watch.

Tag Archive for: United States

Reset Pax Americana: the West needs a grand accord

The world is trying to make sense of the Trump tariffs. Is there a grand design and strategy, or is it all instinct and improvisation? But much more important is the question of what will now happen, as new possibilities emerge from the shock effect of the tariff announcements and from subsequent moves and counter-moves.

For many, the United States is behaving erratically and imprudently, not least by lashing out at its allies and partners and by confusing financial markets. It’s risking its credibility by engaging in what appear to be irrational and self-harming actions that have already generated systemic financial shocks. Confidence in US leadership and economic rationality is being shaken.

To judge what might happen next, one must see the through-line—namely, Trump’s long-held grievance about what he sees as unfair global economic arrangements and widespread freeriding on the US, and his willingness to deploy all instruments of power to set this right. For Trump, the functioning of the global financial and trading system has seen the US incur the costs of entrenched trade deficits, hollowing out of the US industrial base and overvaluation of its currency, a consequence of the reserve status of the US dollar and US Treasury bonds.

At the same time, the cost of underpinning global security since 1945, through the so-called Pax Americana, has been borne disproportionately by the US taxpayer, who now carries US$36 trillion in federal debt. For the first time in its history, the US is spending more on debt interest than on defence. Meanwhile, allies and partners, with few exceptions, have minimised their defence spending wherever possible.

It is clear that Trump will no longer tolerate a situation where other countries gladly consume the security that the US produces, at significant cost to US taxpayers, without contributing materially to that security and while enjoying the prosperity it brings.

Bargains regarding prosperity and security are often intertwined. The 1944 Bretton Woods agreement was negotiated at a time when the postwar security order was being shaped. The deal ended in August 1971, when President Richard Nixon suspended the US dollar’s convertibility to gold and introduced a 10 percent import tax to compensate for ‘unfair exchange rates’—overvaluation of the US dollar. In September 1985 in what became known as the Plaza Accord, the US agreed with leading western economies that the US dollar would be devalued in a managed fashion to tackle a mounting US trade deficit. All the while, the US kept up its end of the bargain in protecting allies and partners.

We should not be surprised that from time to time, the US might deploy its enormous strategic and financial power to reset the terms of global prosperity and security. Whether by design or otherwise, we appear to be in another such moment.

Through the shock of the Trump tariffs, the US has created for itself an extraordinary opportunity to restructure the global trading and financial system, with two twin objectives in mind. These are to increase the relative gains from that system for Americans and to reallocate the costs of Pax Americana, so that they are borne more by allies and partners and less by US taxpayers.

To this end, the US should pursue a new global agreement, which might be called the Pax Americana Accord. It should bring all issues to the table in the process, so we are not dealing later with other, related shocks—say, with US currency or debt issues—or with doubts over US alliance commitments.

The best way to do this, in a way that would take maximum advantage of the opening that the tariff shock has created, would be for Trump to call an urgent meeting of what might be termed the ‘G7+’. This would not be a meeting whose objective would be to craft and issue a worthy but forgettable communique. Terms would be set out and agreed in outline, under the threat of total trade war. The details could then be hammered out over the remaining balance of the 90-day pause period.

The G7+ would consist of the US, Germany, Japan, Britain, France, Italy and Canada (as G7 members), along with India, Brazil, South Korea, Australia, Mexico, Indonesia (representing itself and the rest of Southeast Asia) and the European Union (in its own right and also representing the 24 non-G7 EU members). The G7+ would represent 67 percent of global GDP. Others, such as Turkey, Saudi Arabia, Switzerland, Argentina, the United Arab Emirates and Israel, could sign on to the new accord at a later date, as might Taiwan.

The meeting would agree the broad outlines of a Pax Americana accord, which would ultimately address and, as necessary, resolve the following issues:

—US chronic trade deficits and US complaints about tariff and non-tariff barriers to its exports;

—China’s deliberate manufacturing overcapacity, which is creating global trade and financial imbalances, unacceptable supply chain dependencies and a dangerous capacity for rapid war production, all endangering the security and economic resilience of the US and its allies and partners;

—China’s re-exports to the US by way of countries such as Mexico, Vietnam and Indonesia, which would have to be blocked, lest China evade what will be crippling US tariffs and other trade barriers (if a US-China deal cannot be separately done);

—Technological de-risking in relation to Chinese goods and services, to prevent China from gaining security advantages by passing high-risk technology into foreign economies;

—The enduring role of the US dollar as the world’s reserve currency, a global public good that the US provides;

—Long-term funding of the US Treasury, whereby US debt underpins global security (by paying for US military capabilities, another global public good) but where others who consume that security also enjoy income returns as debtholders and are not liable for the recapitalisation of those capabilities;

—US concerns about its industrial base, the strength of which also underpins global security and so represents another global public good;

—Defence spending of US allies and partners, most of which will need to build greater capacity to defend themselves without having to rely on US forces, at least in the early stages of a war;

—Potential for co-production of defence capability, in which allies and partners make larger contributions to US development programs; and

—Strategic reservation of critical minerals and other tangible assets by US allies and partners and the granting to the US of concessional access to these assets.

This is an ambitious agenda. A Pax Americana accord would address US trade grievances but more importantly would better spread the costs and risks of global security. It would reset the terms of Pax Americana such that it could be sustained. The US would be reassured about its strategic solvency, and allies and partners would take an active stake.

This would require negotiation of complex deals and arrangements. Achieving it would mean treading a narrow path. Careful and precise execution would be required, especially to reassure financial markets, which are always inclined to lose their minds during periods of uncertainty. If only we had a modern-day James Baker, the driving force behind the 1985 Plaza Accord. With the mandate of Reagan, who set the direction without managing the details, Baker deployed US power through velvety diplomacy in pursuit of US interests, knowing that US allies and partners would always prefer to deal with America, even when it was having a bad day. Has their attitude changed from Baker’s time? We are likely to find out over the next 90 days.

China will have to brought into any accord at some point. The underlying problems that have led us to this point are largely a consequence of Beijing’s strategy of concentrating industrial power in China. This has stunted development of a services-based economy in China, distorted global trade and supply chains, hollowed out Western industrial bases, delayed the industrialisation of the Global South and created national security and economic resilience risks for the US, its allies, partners and others.

Through a concerted strategy, as sketched out here, global trade could be rebalanced such that China would have to divest itself of overcapacity, including to the benefit of less developed countries.

By reallocating the costs of Pax Americana, the US would gain more financial and strategic resources to deal with the risk of China’s growing power and its strategic ambitions. It would be sustainably solvent, sitting at the centre of a reformed global system of prosperity and security. That would be worth the volatility of recent days. Whether we have arrived here through great cunning or as a consequence of instinct and improvisation does not matter much. What matters is the art of getting the deal done.

Anticipating what Trump wants, Taiwan puts money in America first

Taiwan’s President Lai Ching-te must have been on his toes. The island’s trade and defence policy has snapped into a new direction since US President Donald Trump took office in January.

The government was almost certainly behind a deft move by the country’s giant semiconductor company, TSMC, to set up three production facilities in the United States. Also, Lai’s administration has stepped up plans to import the kinds of US products that would catch Trump’s eye. It’s pushing for a hefty rise in defence spending, too.

Anyone would think that Taiwan had done its homework and was ready for the new US administration. Or maybe it’s just faster on its feet than most. Senior Taiwanese officials have been carefully studying Trump’s agenda and looking for items they can enthusiastically support and that advance Taiwan’s interests.

Take TSMC’s announcement in early March that it was sinking US$100 billion into the US to build the chip plants, along with a research and development centre, bringing its total pledged investments in the US to US$165 billion. This came after Trump accused Taiwan of stealing the US’s chip business on the campaign trail and threatened a 100 percent tariff on chips.

In Taiwan, there was an uproar. Many Taiwanese believe TSMC, which makes at least 80 percent of the world’s most advanced chips in Taiwan, is a ‘silicon shield’. They see it as crucial for Taiwan’s geopolitical protection as it gives foreign countries an incentive to protect the country. There were worries that if Lai went along with Trump’s push to reclaim the world’s chip industry for the US, the silicon shield would be weakened.

But Lai understood that, if he appeared to be obstructing Trump’s agenda, diplomatically isolated Taiwan might be discarded. Had Trump not won the US election, TSMC probably would not have announced such a large investment. But the gamble paid off. On the day of the announcement of the deal, Trump appeared happy.

‘I would say it came off as an extraordinary success,’ Chris Miller, author of Chip War and a world expert on the semiconductor industry said at a seminar in Taipei in late March.

‘TSMC managed to put itself in a position of a partnership with the new administration,’ Miller said. ‘All these are wins for TSMC and wins for the U.S.-Taiwan relationship as well.’

‘I don’t think the TSMC announcement solves every issue. But it does put the relationship on a much stronger footing.’

Taiwan’s chip industry is unlikely to see significant changes in the next five years. Building plants in America is a sluggish process. Many experts also reckon TSMC is born of a unique industrial and cultural ecosystem in Taiwan that will be extremely hard to uproot and duplicate in the US.

Lai’s moves don’t stop with chips. He also has plans to buy natural gas from Alaska, announced as early as February. Taiwan historically has one of the strongest environmental movements in Asia and most Taiwanese are highly conscientious about conservation. But Lai and his officials noted Trump’s plans to expand the oil and gas industry.

They also noted Trump believes trade deficits are a threat to the US economy. Lai and his team pragmatically hope the procurements will help reduce the US’s deficit with Taiwan, which in 2024 was its sixth largest, and that this will also help with Taiwan’s energy security.

Currently Australia, Qatar and the US are the three largest suppliers of natural gas to Taiwan, with the US supplying 10 percent. When the Alaskan deal eventuates, it’s highly likely that Taiwan will prefer to reduce imports from Qatar, as it will be unwilling to alienate Australia for strategic reasons.

Then, Lai also moved quickly with plans to buy US agricultural products. Taiwan’s foreign minister announced in late March that Taiwan would send a procurement mission to the US this September. Lai has also promised to push the defence budget to more than 3 percent of GDP this year, up from the planned 2.45 percent.

Of course, Lai’s battle is far from over. The Trump administration is highly unlikely to be content with that level of defence spending and will push Taiwan to spend 5 percent or even 8 percent of its GDP on defending itself. And on 2 April, Trump announced a new wave of tariffs in the US’s most aggressive trade action in nearly a century. Among them was a 32 percent tariff on goods from Taiwan, exempting semiconductors. Outraged Taiwanese officials are protesting. Miller says he expects much more friction and a lot of ‘hard-elbowed’ diplomacy between Taiwan and the US for the next four years.

But Taiwan notably proposes no retaliatory tariffs. Lai is obviously still focused on good relations with Trump.

These early moves say a lot about Lai’s leadership style. He and his independence-minded Democratic Progressive Party have revealed a strong pragmatic streak. Lai has also shown he is able to put himself in the minds of Trump and his supporters and anticipate what pleases them.

In trade, nothing can replace the US consumer. Still, Asian countries look to each other

How will the US assault on trade affect geopolitical relations within Asia? Will nations turn to China and seek protection by trading with each other?

The happy snaps a week ago of the trade ministers of China, Japan and South Korea shaking each other’s hands over progress on a trilateral trade pact suggested that possibility.

The three, from nations with deep historic antipathy towards each other, said an agreement would create ‘a predicable trade and investment environment’, and they promised to speed negotiations.

There had been no discernible progress on the proposed trilateral deal since negotiations were launched in 2012. That this was the first ministerial meeting since 2019 points to the challenge ahead.

Asian nations have been active—some would say hyper-active—in pursuit of trade deals. The Asian Development Bank counts 77 preferential trade agreements among the nations of the Asia-Pacific region (including Australia) and a further 109 agreements signed with nations outside the region. Its research shows the agreements provide little help to export volumes.

About 56 percent of Asia-Pacific trade is within the region, which is only slightly less than the internal trade of the European Union. However, the intra-regional trade share has shown no growth since 2005 and has in fact slipped since 2020, despite the spread of trade deals.

Asian nations hit by US tariffs will certainly seek sales elsewhere. However, the first link in the supply chains that bind together enterprises across the region remains China’s subsidised manufacturers while the prize market remains the ravenous appetite of the US consumer.

There have been big changes in Asian trade patterns over the past decade. China has become more self-sufficient, particularly since 2018, when Donald Trump launched his first round of tariffs.

China’s President Xi Jinping responded in 2020 with his Dual Circulation Strategy, under which China would remain open to world markets but would seek economic self-reliance and import substitution in strategic sectors.

An analysis by Hinrich Foundation shows the success of this import-substitution drive. For every $100 of GDP growth over the past decade, China has had to import only $12.50 of goods and services, whereas in the decade to 2013, it needed $21.50 of imports for every $100 of GDP growth.

China’s imports are increasingly concentrated among a handful of countries, led by Russia, Vietnam, Brazil and Australia. Hinrich estimates that countries representing less than 10 percent of the global economy have supplied two thirds of China’s import growth over the last decade.

China sought, in particular, to become less dependent on the United States as both a market and as a supplier. The US share of China’s exports fell from 20 percent in 2018 to 12 percent last year, while the US share of China’s imports dropped from 8 percent to 6 percent.

While China’s direct trade with the US has fallen, its trade with Southeast Asia has increased. China’s share of Southeast Asian exports rose from 12 percent to 16 percent over the past decade, while its share of the region’s imports went from 16 percent to 24 percent.

Rather than exporting finished goods to the US, China is selling components to such countries as Vietnam, Cambodia and Malaysia, which then sell finished goods to the US.

The US has provided most of the growth for Southeast Asian exporters, with its share of their sales rising from 9 percent to 15 percent over the past decade.

There has been no growth in the US share of Southeast Asian imports, which has held steady at around 6 percent for most of the past 20 years.

The US has also become much more self-sufficient over the past decade as a result of the surge in its oil and gas production following the development of fracking technology.

However, US imports of manufactured goods have continued to rise. Estimates by Council on Foreign Relations fellow Brad Setser show the US trade deficit in manufactured goods has almost doubled since the 2008 global financial crisis to about 1.3 percent of global GDP.

In the same time, China’s manufacturing surplus has almost tripled to 1.7 percent of global GDP. Other Asian countries have become intermediaries in the flow of manufactured goods from China to the US but have not replaced it.

There is no other market like the US consumer. US household spending in 2023 reached $19 trillion, double the level of the European Union and almost three times that of China.

The huge imposts on US imports from China, Vietnam, Cambodia, Thailand and Indonesia will increase the cost and slow the flow of goods to US consumers, but there are no obvious markets to replace them.

Whether the tariffs act as the catalyst for the reindustrialisation of the US—an objective of both Republicans and Democrats—remains to be seen.

Unlike China’s flotilla, the Great White Fleet came in friendship

When the US Navy’s Great White Fleet sailed into Sydney Harbour in 1908, it was an unmistakeable signal of imperial might, a flexing of America’s newfound naval muscle. More than a century later, the Chinese navy has been executing its own form of gunboat diplomacy by circumnavigating Australia—but without a welcome. The similarities and differences between these episodes tell us a lot about the new age of empires in which Australia now finds itself.

Both were shows of force. The former expressed President Teddy Roosevelt’s foreign policy of speaking softly while carrying a big stick—the original version of peace through strength—while the latter aimed at disturbing the peace.

The Great White Fleet’s visit was a spectacle. Australians cheered as 16 gleaming battleships, painted white and with shiny trim, paraded into Sydney Harbour. A flight of steps, the Fleet Steps, was specially built in the Royal Botanic gardens to receive the American visitors.

The visit was a calculated diplomatic manoeuvre by Prime Minister Alfred Deakin in making the invitation and by US President Teddy Roosevelt in accepting it. Both Australia, a young federation deeply tied to the British Empire, and the United States, a rising but not yet super power, saw value in signalling US Pacific presence to Japan.

For Roosevelt, the fleet also presented his big-stick foreign policy to European nations: the US had arrived as a global power. Just as important, he saw the fleet’s world tour as helpful in explaining to the American people why they needed to spend money on defence, including ships, as their country opened up to global opportunities but also threats. Deterrence, preparation, social licence all strengthened national resilience.

Deakin saw the chance and didn’t just invite the fleet to Australia but engineered the visit. He wanted the visit to kindle the notion in Australia that it should have its own fleet. Irregular Royal Navy deployments to the Far East could not guarantee Australian security.

Also like Roosevelt, Deakin knew that a passive approach to defence policy would not keep the nation safe in an era of rising military powers, with a strategic shift to proactive engagement needed urgently, not only once a crisis had begun. He was especially concerned about Japan’s growing sea power but, again like Roosevelt, he also had an eye on Russian and (later) German sea power.

While Deakin wanted a national navy and was an empire man, he thought it prudent to start building a partnership with the US. Not yet replacing Britain as global leader, it had burst on to the strategic scene only a decade earlier. It had annexed the Philippines in 1898 in the Spanish-American War and, in the same year, the Hawaiian Islands. These made the US a Pacific power.

Both men in the early 1900s understood the connection between European and Pacific security and both set out to protect their national interests by working together against European and Asian powers seeking to create instability and spheres of influence.

As Russell Parkins well describes in Great White Fleet to Coral Sea, Deakin noted in one of his written invitations to the US that ‘No other Federation in the world possesses so many features of likeness to that of the United States as does the Commonwealth of Australia’. Roosevelt later acknowledged he had not originally planned for the fleet to visit Australia but that Deakin’s invitation had confirmed his ‘hearty admiration for, and fellow feeling with, Australia, and I believe that America should be ready to stand back of Australia in any serious emergency’.

This was naval might wielded with soft edges: immense firepower floating on the harbour, and friendly chats over tea ashore.

Today the strategic environment again involves European and Asian powers—Russia and China—seeking spheres of influence, only the dynamics of the naval visit couldn’t be more different. No time for afternoon tea, just the reality that Australia faces a security threat from Beijing that demands national preparedness and international friendships and alliances.

When Australia and China encounter each other at sea, the interactions are adversarial, accompanied by dangerous Chinese manoeuvres, high-powered lasers shining into cockpits, chaff dropped into Australian aircraft engines and sonar injuring Australian navy divers. These are not friendly port calls but dangerous military activities and displays of coercive statecraft.

The Great White Fleet sought goodwill and alliances. China’s naval behaviour is an assertion of dominance. If the Australian public were in any doubt about how Beijing intended to interact with the region, China’s behaviour in this most recent episode should be instructive. The lack of warning given to Australia was a warning itself of what is to come. Beijing wants us to heed it and submit.

We must not submit. We must learn from the incident and change Beijing’s behaviour.

When a Chinese naval flotilla last made a port call to Sydney, in 2019, it was met with some public unease, if not alarm. Australia had, after all, approved the visit. But through a combination of Canberra’s ignorance of history and Beijing’s aim of rewriting it, the visit was approved without recognising that it coincided with the 30th anniversary of the Tiananmen Square massacre.

Not long after the negotiated port visit, China suspended ministerial-level engagement as part of coercion to bring Australia into line. Despite some warming in relations in recent years, Beijing chose not to give Australia advance notice of live-fire exercises. The same Beijing that only a few years ago gave notice of a visit now has the confidence to fire at will.

Australia must stop being surprised by every new Chinese military or hybrid warfare development. Beijing’s confidence is growing in all domains, including cyberspace. With intrusions known as Volt Typhoon, China’s intelligence agencies were outed in 2023 as having pre-positioned malware for disrupting and destroying our critical infrastructure. This should also be seen as a rehearsal for later cyber moves.

And now, for the first time in the modern era, we have seen a potential adversary rehearse its wartime kinetic strategy against Australia. Yes, the Japanese did surveillance and intelligence gathering before World War II, but this circumnavigation with live-fire exercises takes us well beyond intelligence collection. Beijing has been undertaking ‘intelligence preparation of the battlespace’ for some time with ships it frequently sends to Australian waters to observe our exercises or to conduct oceanographic studies (which improve submarine operations).

Just as the Great White Fleet helped to inspire the development of an Australian navy, the Chinese flotilla should warn us that our own fleet needs to be larger and ready to assure our security. The rhyme of history is that distant fleets operating in Australian waters matter and should spur our own thinking (and act as catalysts for action) regarding Australian sovereign capabilities.

After all, these episodes underscore an enduring truth about Australia’s geopolitical reality: we are a regional power situated between global hegemons and their very large navies. One could even say that we are girt by sea power. But this is not new territory; it is the blessing and burden of geography and history.

Whether it was navigating the transitions from British to American primacy in the Pacific or more recently adjusting to China’s challenge to the US-led order, Australia has always had to manage its strategic relationships with agility and nuance.

The key difference, of course, is that Australia welcomed the Great White Fleet in 1908 with open arms. Today, Australia finds itself on the receiving end of an unwelcome presence by ships that appear uninterested in friendly port visits. This demands a response that is not reckless but is firm enough to avoid being feckless.

Although the position is difficult, the Australian government should not think it must walk a tightrope in dealing with China. The strength of response to Beijing’s aggression should depend on the minimum needed to deter more aggression, not by a perceived maximum that will leave trade and diplomatic relations unharmed. European countries have made such mistakes in handling Russia—declining to hold it to account in the hope that Putin would keep selling gas to them and delay military action.

There’s no use in pretending or hoping there is nothing to see here except one-off instances of unpleasant behaviour. China’s aggression follows its concept of dealing with the rest of the world, and it won’t stop. Quiet diplomacy won’t deter Beijing from more dangerous behaviour but will embolden it to repeat its actions. Each instance will show Australia is incapable of doing anything about it until Beijing—mistakenly or intentionally—goes so far as to make conflict inevitable. Australia’s time to stand up cannot wait until a live fire drill becomes just live fire.

As Teddy Roosevelt put it, big-stick foreign policy involves ‘the exercise of intelligent forethought and of decisive action sufficiently far in advance of any likely crisis’. Navigating the best response to aggression therefore requires clarity about what is at stake.

What Australia does in the South China Sea—where it operates in accordance with international law alongside allies—is not equivalent to China’s recent foray into the Tasman Sea. Beijing’s actions represent yet another demonstration of reckless behaviour, following its dangerous harassment of Australian forces. By making various attacks—with lasers, chaff or sonar—China shows an undeniable pattern of attempted intimidation. When Australia sails into international waters, we do so to maintain the rules-based order and promote regional stability, yet when China does the same it is often to undermine the rules and destabilise the region.

The intimidation is in fact regional; it’s not just about Australia. Just as the Great White Fleet demonstrated America’s arrival as a Pacific power, China’s naval activities signal Beijing’s intent to reshape the region’s strategic balance. Australia, as it has done before, must adapt. It must spend more on its own defence capabilities, deepen relationships with like-minded democracies and maintain the diplomatic dexterity that has long supported its survival in a world of rising and falling empires.

Most importantly, the government must bring the Australian public along for the voyage. The threat from China should surprise Australians no more than the threat from Putin should surprise Europeans.

Knowledge is power and the Australian public can be empowered, and therefore prepared, not to be shell-shocked by China’s aggression. It should instead be reassured that the Australian government has the situation in hand and that defence investment is a downpayment on our future security. It should be reassured that the spending makes conflict less likely.

Australia is not a major power, but we have the world’s 13th largest economy and are not without influence. We should stop seeing ourselves as a middling middle power. We definitely shouldn’t act as a small power. We should be confident as a regional power. Our voice, actions and choices matter at home and abroad. It’s why Washington wants us as an active partner and Beijing wants us to be a silent one. Australia’s global advocacy for a rules-based system, and its public calling out of Beijing’s wrongdoing have been highly valued in Europe, Asia and North America.

Smaller regional countries rely on us to stand up to Beijing where they feel unable, while Europe increasingly knows the fight against Russia is also a fight against Russia’s ‘no-limits’ partner, China. And an Australia that stands up for itself and our friends will again demonstrate the value of partnerships to our ally the US.

Roosevelt’s Great White Fleet epitomised show of force as a means to deter conflict as well as preparation should deterrence fail. (Its cruise was also an exercise in long-range deployment.) The time for deterrence and preparation is with us once again. A Chinese foreign ministry spokesperson said this month that China was ready for war, ‘be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end.’

We need to show, along with our ally the US and other partners, that war is not what we want but is something we are prepared for. If we cannot show that we have a capable stick, and the intention to use it if required, we will be defeated with or without a fight.

As Teddy Roosevelt said: ‘Peace is a great good; and doubly harmful, therefore, is the attitude of those who advocate it in terms that would make it synonymous with selfish and cowardly shrinking from warring against the existence of evil.’

The past tells us that navigating strategic competition requires a blend of strategic foresight and political agility. The echoes of 1908 should serve as both warning and guidepost for the uncertain waters ahead.

In national security, governments still struggle to work with startups

AUKUS governments began 25 years ago trying to draw in a greater range of possible defence suppliers beyond the traditional big contractors. It is an important objective, and some progress has been made, but governments still lack key processes for getting technologies from disparate new suppliers into service.

This is leaving security gaps. Even if they are building economical dual-use products that should be easily adapted for national security purposes, many companies find it hard to work with the government.

For example, an intelligence service may be better able to detect a hostile state threat if it could use an investigative tool already sold to banks for monitoring financial transactions. But if working for the government takes too long, the vendor will simply stick with its financial customers.

The issues are complex, but the ball is in governments’ court. If governments want to benefit from vendor diversification in defence and security, they’ll have to be more open on the problems they are trying to solve, quicker to contract with startups and more willing to learn through rapid iteration.

Governments can seek to solve their hardest security-technology challenges in a few ways. They have traditionally tried to build the solution in house or have paid a large defence prime to do it. This century they’ve slowly realised that their hard problems are not always unique and that solutions already exist in the marketplace—just not within their traditional supplier base.

In 1999, the CIA set up In-Q-Tel and in 2004 US Grand Challenges were established; these were competitions open to many entrants, often newcomers. Britain has published technology challenges since 2008 and recently set up a Co-Creation Centre. Australia joined In-Q-Tel International in 2018 and has similar programs to engage the startup community.

That’s a lot of effort in the right direction. Yet governments still find it hard to engage with non-traditional suppliers. One reason stands out: officials trying to pull-through new capabilities have to fight against the system to take a risk on a novel supplier.

Venture capitalists, on the other hand, are prepared to take risks early, backing a company with millions of dollars based on potential sales. Many Silicon Valley investors actually discourage startups from trying to sell to governments, even if the products are directly relevant to national security or defence. Government sales are too sporadic and slow for them.

Unfortunately, the best choice for many companies is often to stick with making products for commercial customers and just being ready for government customers to turn up if they want to. The attitude is: ‘build it and (maybe) they will come.’

Governments would ideally be able to exploit a product for defence and security operational advantage before it reaches the open market. They now regretfully acknowledge that game-changing products are being sold before they can be exploited in secret.

The best approach to solving this is countercultural to organisations who want to keep everything under wraps secret and built in-house. The answer is to be more open, less secretive and to accept more risk.

Governments openly talk about what technologies they care about in the longer term (such as quantum or synthetic biology) and how they are improving what’s called ‘pull-through’—the gap between technology demonstration and deployment. The mechanisms include grand challenges, grants, co-investments and quick contracting.

But governments are not good at explaining why some technologies are important and where they will be deployed operationally, often because of a preference for secrecy. If a government takes years to build a technology platform in secret, the result is likely to be secure but will be quickly overtaken by commercial technology.

The conflict in Ukraine means military technology is being conceived, developed, tested and deployed at eye-watering speeds in front of social media and the public. Governments are only now being more open about the operational context in which the technology will be deployed, share specific requirements and constraints openly and upfront (that is, explain the why); meaning the right solution can be developed more quickly.

Britain is leading the way. For instance, the Ministry of Defence has publicly tendered for one way attack drones and autonomous maritime weapons for Ukraine.

Sharing of why and where technology will be deployed results in quicker operationalisation. New and better versions can be created with user feedback; the first version can be discarded and replaced with a new one, which itself might not last long as iterations appear. In this paradigm, the rapidity of pull-through becomes a source of operational security, because the adversary is forever trying to catch up on what you’re doing.

With more global competition and the West’s diminishing technological superiority demands government embrace proper processes to harness dual-use commercial technology—of the speed and scale that nimble companies normally focused on private customers can deliver. We must make it work.

Open Australia versus closed United States

Beyond trade and tariff turmoil, Donald Trump pushes at the three core elements of Australia’s international policy: the US alliance, the region and multilateralism.

What Kevin Rudd called the ‘three fundamental pillars’ are the heart of Australia’s foreign policy consensus.

Even Robert Menzies had versions of those pillars in his policy Parthenon. The consensus dates from the dark days of World War II, when the United States stepped up to perform the vital role Menzies defined as the ‘great and powerful friend’.

The eight-decade lineage means Australia is not about to give up on alliance, region and multilateralism as expressions of our interests, history and geography. But Trump alters Australia’s understanding of what the pillars can support.

The scope of region has grown from the South Pacific and East Asia to become the Asia-Pacific, and now the Indo-Pacific. The sorry state of the United Nations means multilateralism offers a rules-based order where rules rupture and order buckles. The US ‘is turning against the liberal international order that it once forged’, Chatham House argues, drawing on its research for the US National Intelligence Council.  The alliance has deep roots in the dire days of 1942 when Washington made General Douglas MacArthur commander in the Southwest Pacific, instructing him to repel the Asian invader and hold ‘the key military bases of Australia as bases for future offensive action’.

The treaty expression of the alliance, ANZUS, now in its eighth decade, rests on a promise to consult about military threats. Thus, while NATO is shocked to sense Trump-sized holes in the promise of automatic military response to attacks, Australia has always understood the contingent nature of ‘consult’, all that ANZUS actually compels the signatories to do in case of security threats. The embrace of the alliance totem by Menzies raises three implicit questions about any US administration: How great? How powerful? How friendly?

Trump has changed the politics of the alliance consensus in Australia’s election. Peter Dutton proclaims: ‘If I need to have a fight with Donald Trump or any other world leader to advance our nation’s interest, I’d do it in a heartbeat.’

Fight the US president in a heartbeat? Roll over, Bob Menzies. A Liberal leader breaks an unwritten rule of Australian politics that states that any party doubting the alliance is punished by voters.

Former Liberal prime minister Malcolm Turnbull offered a meditation on how Australia must recalibrate ‘to discuss how we can defend ourselves without America’, arguing that ‘Trump makes it very clear he is both a less reliable and a more demanding ally.’ 

Canberra wise owls such as Dennis Richardson recognise this less-reliable-more-demanding judgement of the US, while still embracing the alliance. Attempting that balance, Dutton offers to fight Trump while maintaining that the AUKUS submarine isn’t at risk, because both sides of US politics see its benefits.

Even the crown jewels of the alliance lose shine. The Economist surveyed Trump’s damage to ‘the world’s most powerful intelligence pact’, the Five Eyes signal intelligence partnership of the US, Britain, Australia, Canada and New Zealand, identifying three risks:

—The US will disrupt the arrangement, ‘perhaps acting on its threats to boot out Canada from the Five Eyes’;

—The allies will share less, fearing that ‘the Trump administration will be lax in protecting its secrets’; and

—The most likely scenario is that Trump’s war on the federal bureaucracy and politicisation of the intelligence community ‘will cause turmoil and paralysis among American spies that spill over onto allies’.

In the new reciprocal tariff schedule just released by Trump, Asia is the top target. Countries getting tariffs in the 40 percent range include Vietnam, Cambodia, Sri Lanka, Laos and Myanmar; those in the 30 percent range include China, Taiwan, Indonesia, Thailand and Bangladesh; those in the 20 percent range include Japan, South Korea, India, Malaysia and Pakistan.

As Trump imposes tariffs to shut out the world, Australia could show the Indo-Pacific how open it is by killing the last of its tariffs, completing our trek from being a highly protected economy to one of the most open in the world. Australia’s remaining tariffs range from 3 to 5 percent. We could quickly go to zero. Bryan Clark of the Australian Centre for International Trade and Investment says: ‘Abolishing tariffs would lower prices for consumers, reduce business costs and simplify supply chains, boosting resilience in a disrupted global market.’

Zero tariffs would be an emphatic response to an autarkic US and a practical invitation to the rest of the Indo-Pacific. Australia would answer bad policy with good policy—open Australia versus closed US.

The value of Ukraine’s critical minerals is overstated

Anyone involved in Australia’s critical minerals industry would be rolling their eyes at the transaction still reported to be under consideration between Ukraine and the United States.

US President Donald Trump was initially asking for the first US$500 billion in proceeds from Ukraine’s minerals development. Preliminary discussions spoke about the country’s critical minerals reserves being worth ‘trillions of dollars’.

As Lynas Rare Earths chief executive, Amanda Lacaze, said to The Australian:

In the time that I’ve been involved in rare earths, I’ve heard about a rare earth race to the moon because there could be lots of mining on the moon to get rare earths.

I’ve heard about a sort of rare earths race to the sea floor because there’s lots of rare earths on the sea floor, which could be useful in the future. I heard about a rare earths race to Afghanistan at one stage.

In fact, Ukraine has no proven rare earths reserves—as distinct from deposits, which may or may not be economically recoverable. Its only established rare earths deposit, of unknown size or quality, is near Azov, a town currently under Russian control.

Ukraine does have some other critical minerals, but nothing established to the point that it would warrant the investment of billions of dollars, let alone hundreds of billions or trillions.

Ukraine’s geological survey agency claims 19 million tonnes of reserves of graphite, used for batteries. China was the major world supplier of graphite, but it restricted exports last October in response to US controls on sales of semi-conductors.

Australian listed company Volt Resources holds 70 percent of Ukraine’s major graphite operation, the Zavallivsky mine, which has been active since 1934. However, its output is not up to lithium-battery standards. The scale of its operation is indicated by Volt’s market value of just $18 million.

Ukraine has more substantial deposits of manganese, but its output is barely a tenth of Australia’s and would earn it little more than $200 million a year.  Ukraine’s claims of critical minerals riches mainly rest on Soviet geological surveys done 30 to 60 years ago, not nearly recent enough to justify investment by Western financial standards.

Trump said Ukraine ‘holds no cards’ in negotiations over its future. Ukraine’s government essentially invented its mineral riches to give itself a card to deal with Trump.

With considerable foresight, Ukrainian President Volodymyr Zelenskyy used the D-Day ceremonies in France in June to lobby a key Trump ally and rare Republican supporter of aid to Ukraine, Senator Lindsay Graham. Zelenskyy told him that Ukraine’s minerals were worth as much as US$12 trillion.

‘If we help Ukraine now, they can become the best business partner we ever dreamed of’, Graham said. ‘That $10 to $12 trillion of critical mineral assets could be used by Ukraine and the West, not given to Putin and China.’

Graham repeated those comments after leading a Senate delegation to Kyiv, a few weeks before Zelenskyy travelled to the US last September. Zelenskyy’s visit was controversial: the Republican leader of Congress, Mike Johnson, refused to meet him, and Trump was expected to do the same.

After making a personal appeal to Trump, Zelenskyy was granted an audience at Trump Tower in New York. During this meeting, he evidently sold the idea of a minerals partnership, mentioning the potential revenue of US$500 billion.

Ukraine doubled down on these claims at this year’s World Economic Forum in Davos, Switzerland, where its delegation spoke of critical mineral reserves worth US$12 trillion. Trump took the bait, but Zelenskyy could not close the deal, despite guidance from Graham on how to handle Trump ahead of the ill-fated televised meeting on 28 February.

While Trump responded to the appeal of large numbers, the reality of critical minerals mining, and particularly rare earths, is that it is painstaking work. It takes years to prove up deposits, to determine how to process them, to secure customers and then, and only then, to raise the capital for development.

Australia has been discussing collaboration with the US on critical minerals ever since former prime minister Malcolm Turnbull’s first meeting with Trump in February 2018.

There has been follow-up: the US Department of Defense helped fund a Lynas joint venture to process heavy rare earths in Texas; the US Export-Import Bank provided conditional letters of intent to lend $1.3 billion to two Australian rare earths miners; and there has been collaboration between Geoscience Australia and the US Geological Survey.

The Albanese government agreed on the Climate, Critical Minerals and Clean Energy Transformation Compact with former president Joe Biden in May 2023. However, it was not formally ratified by US Congress ahead of the new administration, which will likely not appreciate the compact’s climate change focus.

While Japanese government support was pivotal to the success of Lynas, the Australian government has been left to put up the risk capital behind the development of recent Australian rare earths processing capacity.  There has been no influx of US risk capital.

The geography of American power

The United States is a secure power. Situated in a hemispheric citadel, and protected by wide oceans, the US could comfortably withdraw from being the arbiter of the geopolitical fate of Eurasia and still enjoy a significant margin of security. Such a US could still project power around the globe. However, it would do so selectively, in the pursuit of narrowly defined interests and objectives. It would need few, if any, allies.  It would remain a powerful global economic actor—fuelled by a massive domestic market, deep private wealth, leading edge innovation, and high population growth.

A locationally withdrawn US would have to be willing to accept the risk of the likely emergence of a hegemonic power in Eurasia. Such a hegemon would be able to establish strategic and military dominion over the population, resources, markets, infrastructure, and polities of Eurasia – from Vladivostok in Pacific Russia to Lisbon in Portugal, and from Nordkapp in Norway to Cape Town in South Africa. It could do so by way of intimidation, coercion, and leverage, where this was necessary. However, such sharp strategies would not be necessarily needed in significant measure. Many nations of Eurasia would probably resign themselves to a new strategic reality, as they came to accept, over time, the reality of economic and military overlordship.

Such a hegemon would become the leading global power. The goal of ‘making America great again’ would ring hollow in a world where a Eurasian hegemon dominated the heartland of the world, and where it could almost always deliver a ‘better deal’ to nations under its dominion—whether or not they were pleased with the terms of the deal.

If the US was not willing to accept its own subordination, it would have to continue to engage ‘forward’ in the affairs of Eurasia, including by way leveraging the significant economic and military resources of the European Union, Britain, Japan, India, Australia, South Korea, Canada, and others to contain the emergence of such a hegemonic power.

This would be a sound geopolitical strategy. Geopolitics is the intersection of geography and power. It is concerned with questions of world order, national power, and coalitions of power. Separately, and irrespectively of whether or not the US continues to engage ‘forward’, there is a related geostrategic issue that confronts Washington. Geostrategy is the intersection of geography and capability, and especially military power. Whether the US withdraws, or continues to lean forward, it must build a sea-air barrier around Eurasia. It has to do so for its own defence and security, and in order to project power into, and around, Eurasia, should it have to do so.

In order to explain the idea of such a sea-air barrier, we need to start with a map.  Specifically, the map projection that US geographer Richard Edes Harrison made famous in 1942, which is known as the ‘One World, One War’ map. Harrison argued that on the traditional Mercator projection of the world, the US appeared to be isolated from the two major wartime strategic theatres of Europe and Asia. Harrison argued that while the Mercator projection was useful in the age of sail and steam, with the advent of air power, an ‘azimuthal equidistant projection’, pivoted around the North Pole, was required to better depict the strategic position of the US in the 1940s. Such a spherical conception of the Earth, viewed from above the North Pole, would better reveal the strong points, the sea areas, and the lines of approach that the US would have to secure and protect for its own defence, as well as for broader strategic purposes. With the coming of the missile age in the 1950s, Harrison’s theories were proven correct.

At the same time as Harrison was working on his maps, Nicolas J. Spykman was coming to similar conclusions, which he laid out in his last book, The Geography of the Peace, in 1944. For Spykman, the geography of Eurasia and the Western Hemisphere was the engine room of history. He argued that history was the eternal process of great powers clashing with one another in the rimlands of Eurasia—that is, Europe, the Middle East, the Indian sub-continent, East Asia, and the littoral ‘inner seas’ of the Mediterranean, the South China Sea, the Philippine Sea, and the East China Sea. The recurring question for US strategy would always be the same—how to control the rimlands and littoral seas of Eurasia, in order to contain and, if necessary, defeat emerging powers, and whether to do so from afar, or in close?

Adapting this thinking, we can today describe a modern sea-air barrier around Eurasia as a series of strong points and areas of control that trace a line around these contested areas. Control of this barrier would allow the US to protect itself from approaching threats, and to more securely project power, whether in its own defence, or for broader purposes, such as protecting its allies.

What line would such a sea-air barrier follow? Starting along the length of Canada’s Arctic coast, the line would run through Greenland, Iceland, the Faroe Islands (which belong to Denmark), and Scotland, an area that forms the ‘GIUK Gap’ (to use its Cold War title).  The US needs to control the GIUK Gap, and have access to Svalbard (which belongs to Norway), in order to contain the threat of Russian sea power in the Atlantic.  From Britain, the line would run to Gibraltar and then to the British bases in Cyprus, so that the US could access the Mediterranean and protect the northern end of the Suez Canal. Through the canal, the line would run through the Red Sea to Diego Garcia, which is the most important US strategic base in the Indian Ocean, vital for projecting power into the Middle East, Central Asia, and eastern Africa.

From there the line would run to Cocos (Keeling) and Christmas Islands, which are Australian offshore territories.  The line would then run through Exmouth, Darwin, and Townsville (which are all in Australia), up to Manus Island in Papua New Guinea, and then to Guam and other key US island territories in the Pacific, as well as the US state of Hawaii.  Finally, the line would run along the Aleutian chain, and then through the US state of Alaska proper, and before linking with the starting point of the line, Canada’s Arctic coast.

From the security of this barrier, the US could project power and protect its approaches, especially in the North Atlantic, the Pacific, and the Arctic Ocean, protect its trade routes and its undersea infrastructure, secure itself in relation to space warfare and missile attack, launch military operations in Europe, the Middle East, Central Asia and Africa, rescue its citizens, and strike at its adversaries.

Control of the barrier would require the sustainment of a few trusted relationships, especially with Canada, Britain, and Australia (which would become the CAUKUS grouping), and with Norway and Denmark. The barrier would be built upon a global network of key points of presence, and would not require the US to hold significant amounts of territory, or maintain an extensive network of expensive overseas bases. Coupled with its nuclear forces, and its space and cyber defences, the barrier would render the US virtually invulnerable, outside of a massive, planet-destroying nuclear strike, which would also see the attacker destroyed.

Australia’s geography is an integral part of the barrier, as it provides a vital base for US operations around the rimlands and littoral waters of southeastern Eurasia, and a swing point for power projection from the Pacific Ocean into the Indian Ocean. The immense value of Australia’s strategic geography is better appreciated in Washington and Beijing than it is in Canberra. In any US-China military conflict, PLA strikes would be conducted against Australian bases and facilities, including in the southern parts of Australia, the latter of which would provide depth and security for US-led coalition operations in the Indo-Pacific region. The recent PLAN task group mission to waters off Australia would have had as its principal military operational objective the conduct of land attack rehearsal activities, targeting bases, facilities, and infrastructure across Australia.

The Western Hemisphere is also crucial for the US from a geostrategic point of view.  Even with the sea-air barrier in place, the US would not be fully secure were Mexico, the Caribbean (especially Cuba), Central America, the Panama Canal zone, northern South America (especially Venezuela), and Brazil to be in various states of dysfunctionality, or were they to be actively hostile to the US, perhaps to the extent of hosting significant Russian or Chinese forces, or both. Further south, the Falkland Islands are critically located for sea control in the South Atlantic, should the Panama Canal become inoperable. Hemispheric defence on the near side of the sea-air barrier would therefore remain an important task for the US.

Whether the US remains forward, or it consolidates itself in its citadel, it has to secure this sea-air barrier.  Being forward makes more sense, as it allows the US to create more favourable strategic positions of strength, to the benefit of US trade, technology, and investment, and for its own security and defence. Being forward is in the interests of the US. However, being forward means that the US has to rely on more partners, most of whom have not been willing, until recently at least, to take on a greater share of the common burden of defence and security. Most have instead preferred to expand social benefits for their own citizens, and pursue economic development, while selfishly consuming US security.

Put another way, the US would be more secure if it were able to control the rimlands and littorals of Eurasia on the far side of its protective oceans—in places such as Japan, Taiwan, The Philippines, Indonesia, Singapore, Malaysia, Thailand, India, the Gulf States, Saudi Arabia, Turkey, Poland, Ukraine, the Baltics, and the Nordic countries. However, such a grand strategy would require constant alliance management, and a willingness on the part of US allies and partners to be prepared to significantly enhance their military capabilities, and to do more to counter the emergence of a hegemonic power in Eurasia. Were the US to decide one day that it could effectively secure itself behind its sea-air barrier, withdraw from Eurasia’s contested zones, and partner with a handful of geostrategically critical allies, many of these beneficiaries of US security would long for the glory days of US primacy and preponderance.

ASPI USA roundtable: Trying to understand US economic statecraft

Governments are outraged, industry leaders are keeping a low profile, and economists and analysts are confused as they work to understand how the Trump administration’s approach can make the United States simultaneously safer, stronger and more prosperous.

In its first month, the Trump administration has shaken up the world trading system as it uses tariffs to try to promote US investment, productivity, industrial and technological advantage; defend US economic and national security; and help US workers.

An ASPI USA discussion with Claire Chu, Aaron Glasserman, Kimberly Donovan, Phil Rogers and William Alan Reinsch this month focused on what this approach means for US-China relations. This is the first in ASPI USA’s series of Chatham House roundtables to consider the Trump administration’s approach to geoeconomics.

The administration has imposed a 10 percent general tariff on Chinese imports, adding to economic measures established under the previous Trump and Biden administrations.

It has threatened to impose 25 percent tariffs on aluminium and steel not made in North America, reciprocal tariffs on all countries, 25 percent tariffs on automobile imports, and tariffs of at least 25 percent on pharmaceuticals and semiconductors. The US will also place 25 percent tariffs on imports from Mexico and Canada, unless these countries can further appease Trump. This is all before considering retaliatory tariffs levied on the US.

If a country adds a tariff to protect an industry, it does so by making foreign goods more expensive and domestic goods relatively more attractive. If the protected local companies then enjoy a larger market, they may expand their workforces.

But tariffs could also lead to job losses in non-protected industries. When companies pay more for imported inputs, they may pass on the higher cost to consumers. They may shrink their workforces, too. Costs would rise for US imports with no domestic alternative, affecting businesses downstream. For example, placing a tariff on coffee would increase prices for cafes. This might then affect bakeries that supply the cafes, as some consumers decide not to buy coffee.

The administration wants businesses to invest in domestic manufacturing, but this will take time. Tariffs and export controls, together with incentives, have led to reduced US investment into China, with some returning to the US. However, Donald Trump has questioned the value of mechanisms incentivising business to relocate. He suggested he might abolish the CHIPS and Science Act, a law that provides funds and incentives for semiconductor research and production in the US. He has also paused disbursement of grants under the Inflation Reduction Act, which seeks to do the same with renewable energy.

Broad tariffs increase production costs, which in turn inflate consumer prices. They also undermine US export competitiveness by increasing production costs and strengthening the dollar, leading to inflation and fewer jobs in the short to medium term.

The US must also consider how applying tariffs on allies and partners will affect its reputation. Imposing tariffs on any country the US perceives as having an unfair trade deficit, including when this is for a single sector within a broader trade surplus (for example, aluminium from Australia), signals a shift toward purely transactional economic relationships.

An apparent US disregard for decades of strategic and security cooperation will erode trust in US leadership, particularly among allies. This will reduce its ability to rally international partners for broader strategic objectives.

The proposed tariffs might also affect the US’s ability to counter China in the Indo-Pacific, particularly regarding Taiwan. Tariffs on Taiwanese goods, targeting its world-leading semiconductor industry, could impact Taipei’s calculus about whether its alignment with the US is in its best interest.

US tariffs could also affect Taiwanese public opinion, influencing voters to reconsider the viability of self-determination and strategic alignment with the US. This would be a gift to China as it works to lure Taiwan to unite with it.

The loss of Taiwan would undermine US national security; isolate key US allies and trade partners; make the 80 percent of global trade that passes by Taiwan and the South China Sea vulnerable to Chinese manipulation; and reduce US commercial access to 60 percent of global GDP.

Further, the Trump administration’s use of economic measures to elicit political outcomes—such as against Mexico to get action on the southern border or Columbia on illegal migrants—undermines its ability to call China out when it does the same.

Campaigning for election, Trump and his supporters boiled his trade proposals down to creating jobs and lowering prices, which would make the country safer, stronger and more prosperous. If the above principles of economics stand, then we must ask why the administration is using tariffs in contradictory ways.

At the roundtable, some experts pointed to Trump’s long-held view that allies and adversaries had taken advantage of the US for decades on trade and security. Others noted that with the national debt at more than US$36 trillion and still climbing, Republicans were willing to back Trump’s deal-making skills to lift revenue and get more favourable trade and political outcomes. While Elon Musk’s effect on trade policy was unclear, maybe the tariff on China being set at 10 percent instead of the foreshadowed 60 percent was because of his investment in the country.

At this stage, it is hard to see a strategy behind the tactics being employed.

The trials ahead for Pete Hegseth

Donald Trump’s new defense secretary, Pete Hegseth, has enormous challenges ahead of him—challenges that could seriously affect Australia by upsetting key elements of our ally’s defence position, including its ability to deliver the Virginia class submarines that are so crucial to our AUKUS plans.

At the heart of problem is Trump’s hallmark tax cuts and the space he needs to clear in the federal budget to enable the cuts without driving the deficit much deeper into the red. The Republicans are aiming to get their program through Congress by bundling everything together into one or two big omnibus bills. This should help them manage their narrow majorities in the Senate and the House of Representatives, but it creates potential problems among the deficit hawks on their own right flank who will be stripped of the ability to debate the cost of individual programs.

This group of Republicans insist that changes to taxes and spending must be at least budget neutral. They are deeply disturbed by the fact that, since the end of the Cold War, government debt has grown from about 40 percent of GDP to 123 percent today and is still rising at about 9 percent per annum.  Unchecked, it could get to about 195 percent of GDP by 2050.

The principal threat to an ability to balance the budget is Trump’s desired tax cuts. The Committee for Responsible Federal Budget calculates that they would cost between US$5 trillion and US$11.2 trillion through to 2035, counting both the permanent extension of Trump’s first term tax cuts—which are due to expire at the end of this year—and new cuts he has promised. These have both been flagged as top administration priorities.

Although Trump seems intent on using tariffs to boost revenue—unlike in his first term, when he was motivated by protecting American industry—it is clear his tariff policy will not resolve his deficit problem should he press his tax changes.

The Tax Foundation, an independent non-profit organisation, estimates that a universal 10 percent tariff would raise $2 trillion through to 2034 and a 20 percent tariff $3.3 trillion—though it would be less if, as expected the tariffs shrink the US economy. This would ‘fall well short of what is needed’ to cover the permanent extension of Trump’s first term tax cuts, let alone the new cuts.

Meanwhile, Trump has outsourced the task of cutting spending to self-proclaimed ‘first buddy’ Elon Musk and his Department of Government Efficiency, or DOGE.  It reportedly is staffed mostly by young men Musk has brought across from the tech sector who have the job of eliminating programs and public servants. Musk suggests that any serious problems arising from haste will be fixed later. Sometimes, as with the sacking of many of those assigned to the supervision of the nuclear weapons stockpile, they have had to be fixed sooner rather than later.

This is one part of the headache Hegseth will soon have to deal with.  He is responsible for the most complex and expensive department outside those that handle social payments. Defence also has the deepest and strongest cultural disciplines—particularly in the armed services—and the most complex and expensive technologies in the world. Going into the November election, the approved outlays for defence were US$895 billion. Trump promised an increase but has since pointed the DOGE directly at defence.

In an interview on Super Bowl day, Trump said he expected to find ‘billions, hundreds of millions in fraud and abuse’ in defence. His national security advisor, Mike Waltz, suggested in a separate interview that ‘the Pentagon in general is full of unnecessary bloat’ and directed aim particularly at shipbuilding, which he said was ‘a mess’.  Yet that program is at the heart of American power.  It is also quantitively, and increasingly qualitatively, challenged by Chinese programs. The shipbuilding industry and the systems supporting the United States Navy are among the most sensitive that the US has.

They are also particularly vital for Australia. The rate at which the US can build submarines needs to improve if they are to deliver Virginia class boats to the Royal Australian Navy in the 2030s, as planned under AUKUS. Australian Defence Minister Richard Marles made a $500 million down payment to enhance the US submarine industrial base as part of the AUKUS package during his positive meeting with Hegseth in early February—the first Hegseth had with a foreign counterpart. Hegseth committed himself to the AUKUS programme including the sale of Virginias, which will be a formidable deterrent and a critical part of Australia’s defence.

Senior Pentagon official Robert Salesses said in a statement this week that Hegseth had launched a review to find 8 percent of the defence budget for the 2026 financial year—about $50 billion—in offsets that would realign spending towards priorities such as border security, an Iron Dome-style aerial defence system. Hegseth had also ordered an end to ‘diversity, equity and inclusion’ type programs. The Washington Post reported the existence of a memo indicating these offsets—which the news report called ‘cuts’—would continue for five years, though it noted that submarine acquisition was among the categories listed for exemption.

The US submarine output rate has been gradually coming up to the levels of production necessary for the AUKUS timetable. What will happen now?

The shipbuilding program, the assertive posture of DOGE and any cuts to the Pentagon overall, represent for Hegseth a massive difficulty. A defense secretary doesn’t have to be loved, but he or she does have to be respected.  This includes respect for the values the armed services evince. The military is proud of its capacity to incorporate women and people of colour in all facets of command and recruitment. Above all is a requirement that its manifold security arrangements cannot be put in the hands of people not qualified and cleared. The youngsters of DOGE are not. The Pentagon will look to Hegseth for that protection—as indeed will we and all the military allies of the US.

If it is thought in the Pentagon that Hegseth can’t cope with the need to protect both secrecy and capability, he will be lost. For any defense secretary, such a failure would be intolerable. It will be particularly so for congressional Republicans who have had to swallow a great deal to approve the appointments of Trump’s choices in the national security area.

All this will be playing out in an environment in which one or two omnibus bills will be hotly contested in Congress.

It has to be remembered that the US is not at the peak of post-World War II spending.  Were that to be the case, defence spending would not be at $895 billion; it would be closer to $2 trillion. Chinese and Russian expenditures are at least as great as they were during the Cold War.

The US is looking for a massive increase in allied spending. Trump has set targets of at least 3.5 percent of GDP, hopefully 5 percent. The allies are nowhere near these targets. Australia is increasing to 2.4 percent of GDP—far short of what Trump wants. We can expect the US administration to come at us. But our challenge is miniscule compared to that facing Hegseth.

Tag Archive for: United States

ASPI-Carnegie Endowment: What’s next for the US-Australia alliance?

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