After winning the October 2013 elections, the new Coalition government of Prime Minister Tony Abbott inherited the difficult task of readjusting Australia’s strategic and defense policy. Power shifts in Asia have already begun to challenge fundamental aspects of Australia’s strategic posture. The rise of China and the relative decline of the U.S. position in the Asia-Pacific region potentially put Australia in a difficult position: that of maintaining close relations with both its major ally, the United States, and its most important trading partner, China. If Sino-U.S. relations become even more competitive, Canberra could find itself between a rock and a hard place. Consequently, some analysts have asked if Australia might face a “choice” between Washington and Beijing, and questioned whether Canberra’s current approach of “having its cake and eating it, too” is sustainable, particularly if its U.S. ally expects Australia to share a greater burden in regional security.
However, it is not just China’s growth that poses tough questions for Australia’s political elites. Key countries in the immediate Southeast Asian neighborhood are also undergoing significant economic and, to a lesser extent, political change. In particular, Indonesia’s current modernization is of central interest for Australia. It is demographically far bigger than Australia and is projected by some to join the ranks of the world’s 10 largest economies by 2030. Other Southeast Asian countries such as Vietnam are also growing exponentially. Finally, India, Japan and increasingly South Korea aim for a more active role in regional security affairs. As a result, Australia’s 2013 defense white paper expects the emergence of a more multipolar, more competitive Asia.
In this new strategic environment, Australia might become relatively weaker than a number of Asian countries, including in Southeast Asia. While Australia’s economy is still strong, it is not growing as fast as that of many Asian nations. This is exacerbated by the fact that, after years of solid economic growth supported by the country’s attractiveness as an exporter of minerals and energy resources, the Australian economy has slowed in the past few years. The previous Labor government promised to return the budget to surplus, only to realize that this goal was unachievable. The Abbott government also campaigned on a platform of significant reductions in federal spending through radical reforms in the public sector, while also promising to scrap unpopular taxes. Therefore, there are questions about Australia’s future ability to maintain its self-prescribed role as an “active middle power” in regional and international affairs.
Strategically, after more than a decade of global military operations in support of Australia’s U.S. ally in the fight against international terrorism, Canberra is “rebalancing” toward its own region. Policymakers hope for a “strategic pause,” not least to reshape the Australian Defense Force (ADF) over the next decade or so. In this context, the government also has to consider harsher fiscal realities that could put constraints on plans to modernize the ADF. In sum, the new Abbott government confronts a myriad of foreign, security and defense policy challenges. After hardly three months in office, it is too early to tell how exactly the government will address all of them. But it is possible to make some cautious predictions based on previous and emerging policy responses.
The greatest challenge for Australia’s current foreign policy is to adjust to what many observers have termed the “Asian century”: the emergence of the region as an economic and strategic center of gravity. In doing so, the Australian government has an abiding interest in promoting a liberal order in the Asia-Pacific region, as much as this is possible. Thus, Australian governments have always been keen to avoid the establishment of new institutions in Asia that would exclude its preferred allies and partners, particularly the U.S. and Japan. Canberra is particularly wary of Chinese attempts to create a new regional strategic and economic order without U.S. participation.
However, in securing its foreign policy interests in Asia, Australia will need to overcome some challenges. One is that most Asian countries, particularly in Southeast Asia, regard Australia as an external Western power, albeit one with a fairly good understanding of the region. This fact often reduces Canberra’s ability to influence multilateral regional organizations. It also minimizes the room for major policy initiatives, particularly if they are seen by Asian neighbors as unilateral and ill-prepared, the prime example being former Prime Minister Kevin Rudd’s proposal for an Asia-Pacific Community in 2008.
Abbott’s first few foreign policy moves show similarities with the Coalition government of former Prime Minister John Howard, in office from 1996 to 2007 and in many ways Abbott’s mentor. Just like Howard, the new prime minister has a preference for bilateralism, dealing with multilateral institutions in a more selective manner, depending on their relative importance. Thus, Abbott attended the Asia-Pacific Economic Cooperation (APEC) leaders meeting in Indonesia and the East Asia Summit (EAS) in Brunei, both in October. At the same time, Abbott also vowed that his future foreign policy would be “more Jakarta, less Geneva,” an implicit criticism of the previous government’s push for a nonpermanent seat at the United Nations Security Council and a pledge to prioritize practical outcomes in predominantly bilateral relations over what he sees as largely symbolic, ineffectual multilateralism.
Another similarity to the Howard government is the skepticism toward grand conceptual foreign policy schemes and an almost exclusive focus on the Asia-Pacific region. As a result, it all but scrapped the Gillard government’s foreign policy white paper, entitled “The Asian Century White Paper.” This paper underscored the centrality of Asia and the need to invest more in capabilities to better exploit the economic opportunities presented by the region’s rise. However, it was not only a lengthy, complicated read, it also announced major milestones such as increasing Asian language skills at schools and universities without providing adequate funding. Further, while in opposition the Coalition highlighted the fact that Australia’s interests went beyond the Asia-Pacific region, pointing to the key relationship with the U.S., as well as relations with some European countries, particularly the United Kingdom, and in Africa.
The Abbott government also seems less inclined to support another central concept of the previous government. The 2013 defense white paper introduced an “emerging Indo-Pacific system” as the future primary operating environment for the ADF in order to emphasize the growing strategic interdependencies between the Pacific and Indian Oceans. The new government has returned to treating them as linked but separated areas. Finally, just like Howard, Abbott is a strong supporter of ties with traditional allies and partners. He is known as a proponent of the concept of an “Anglosphere,” which refers to the maintenance and strengthening of a Western, liberal world order and close relations with countries such as the U.S., the U.K., Canada and New Zealand. It remains to be seen if this approach will impede on closer cooperation with Asian countries.
Key Bilateral Relationships
The United States
The relationship with the American ally is of key importance for the new Australian government, and not just due to common values and a shared commitment to democracy. The U.S. remains critically relevant in economic terms. It is still the biggest source of foreign direct investment, despite the fact that China is closing the gap. Moreover, just like his predecessors Rudd and Gillard, Abbott fully supports the U.S. “rebalance” toward the Asia-Pacific region. For now, the debate on whether Canberra needs to strike a new balance between Washington and Beijing remains largely academic. From Australian policymakers’ point of view there is no “choice” to make, and Canberra is seeking to intensify its practical defense cooperation with the U.S. in support of the pivot. No other defense relationship can provide Australia with the benefits of the Australia, New Zealand and United States (ANZUS) alliance: a nuclear umbrella and access to world-class military technology and intelligence, as well as a high degree of confidence in U.S. support in case of an existential external threat.
Consequently, the Abbott government looks favorably at U.S. proposals for further increasing the security and defense relationship. The first annual Australia-U.S. Ministerial (AUSMIN) meetings between the Abbott government and the Obama administration this month demonstrated Australia’s preparedness to share a greater financial burden of the rotational deployment of U.S. Marines in northern Australia, to support the prepositioning of U.S. defense equipment there and to further upgrade military bases in the north to accommodate American rotational presence, including U.S. Air Force assets. Obviously, this does not mean that Australia is always in full agreement with Washington or that Canberra seeks to “contain” China. Rather, amid greater uncertainty about the future security environment in the Asia-Pacific region, Australia prefers to stay close to the U.S., just as Australia is also becoming geostrategically more important for Washington.
In recent years, Australia’s ties with China have become more important for Canberra. The biggest driver, of course, is the trade relationship, in which China has become the biggest destination for Australian exports. Yet Canberra is also well aware that Beijing will at some point flex its military muscles, so developing closer strategic ties now has become a necessary precaution. First steps in this direction were taken when, during the Gillard government, both sides agreed on an annual high-level strategic dialogue. And Abbott’s second overseas trip after Indonesia was to Beijing. Nevertheless, the challenge for the new government will be how to provide more substance to both the economic and the security relationship.
When it comes to trade relations, Abbott has set a very ambitious goal of concluding a bilateral free trade agreement (FTA) with China within a year. However, given the enormous complexities involved in negotiating such arrangements, many experts doubt that this goal can be met. Moreover, the FTA discussions could easily be stalled by other political and economic issues. For example, new Finance Minister Joe Hockey publicly ruled out any involvement of the Chinese company Huawei in Australia’s major telecommunications project, the National Broadband Network (NBN), the implicit reason being concerns about Chinese cyberespionage and theft. In addition, the Coalition government’s constituent base is very much opposed to foreign ownership, for example in the agricultural sector where Chinese companies seek to invest. Progress in the bilateral economic relationship could thus be rather cumbersome in the years ahead.
Improvements in the security and defense relationship will probably also be rather mixed. Australia certainly seeks ways to intensify engagement with China’s People’s Liberation Army (PLA), for example, in the context of the 2014 RIMPAC exercise, bilateral exchanges between the ADF and the PLA, and the like. The aim is to build greater trust and to “socialize” the Chinese military as it expands its reach. However, the ADF remains firmly embedded into the U.S. Asia-Pacific military posture, and the Chinese leadership is under no illusion about Australia’s integral role in America’s pivot toward the region. Should Sino-U.S. relations become more competitive, Australia’s strategic ties with China could also become more tense.
Abbott’s third overseas trip in his young premiership was to Japan. Moreover, he met Prime Minister Shinzo Abe on the sidelines of the East Asia Summit in Brunei. After that meeting Abbott declared Japan to be Australia’s “closest friend in Asia” and stressed the importance of Japan’s emergence as a key security player in the region. This signaled an important adjustment in Australia’s Northeast Asia policy. Tokyo was quite disappointed after the 2013 defense white paper downplayed Japan’s relevance as a security partner while emphasizing China’s growing power status. Abbott’s stronger support for Japan’s position can be seen as an expression of an expanded “Anglosphere,” one that includes Japan as an established liberal democracy in Asia and recognizes the necessity of close strategic cooperation amid regional power shifts.
Furthermore, the embrace of Japan indicates that the prime minister is at least sympathetic to Japan’s plight amid Chinese maritime assertiveness in the East Sea. Australia joined the U.S. at the last Trilateral Security Dialogue (TSD) with Japan in October in issuing a statement that declared opposition to “any coercive or unilateral actions that could change the status quo in the East China Sea.” This drew an angry reaction from Beijing, which warned both Canberra and Washington to stay out of the row with Japan. Nevertheless, Australia can be expected to support further strengthening bilateral strategic ties with Japan as well as promoting trilateral security cooperation with the U.S., despite Chinese opposition. In the case of increased Sino-Japanese tensions, Australia is likely to side with Japan. Interestingly, Abbott’s support for Japan also demonstrates that Canberra aims to play a greater role in Northeast Asian strategic affairs alongside its traditional ally and partners.
Indonesia is Australia’s most important regional relationship. Yet, though inextricably linked by geography, the two countries are demographically, culturally and socially very different. Australia is a Western liberal democracy with a largely white population of about 22 million. Indonesia is a predominantly Muslim country of approximately 251 million whose political transition to a full democracy remains a work in progress. Moreover, as indicated above, some predictions see the emergence of Indonesia as a major regional and potentially even a global power. If so, it would become much more powerful relative to Australia. The 2013 defense white paper thus pointed to the necessity of closer strategic ties with Indonesia.
Good relations with its northern neighbor are all the more critical since, traditionally, uncertainty about Indonesia’s trajectory has always featured in Australia’s defense planning. Any major threat to the continent could only come through the Indonesian archipelago. A friendly Indonesia able to defend this space would be a major geostrategic asset for Australia, providing additional strategic depth. Supported by Jakarta’s recent economic growth, the Indonesian armed forces (Tentara Nasional Indonesia, TNI) have begun a modernization process that could lead to a more outward-oriented posture. In this context, there are opportunities for intensified cooperation between the ADF and the TNI.
However, the strategic relationship with Indonesia is burdened by periodic tensions and remains highly vulnerable to a “trust deficit” on both sides. For example, the Australia-led 1999 intervention in East Timor, as the Indonesian province moved toward independence, led to a serious crisis in the Australian-Indonesian relationship that still colors the thinking of political and military leaders in both countries. As outlined above, upon taking office Abbott made strengthening the relationship with Indonesia a key foreign policy priority. His first visit abroad was to Jakarta in September, where he promised a policy of “no surprises, based on mutual trust.” Yet, barely two months later the relationship is in deep trouble after revelations that the Australian Defense Signals Directorate in 2009 tried to tap the phones of Indonesian President Susilo Bambang Yudhoyono and his inner circle. Indonesia demanded a public apology and at least temporarily suspended some economic, defense and intelligence cooperation.
Consequently, rather than strengthening bilateral ties, the Australian government will need to invest significant political capital to repair the damage. This not only puts at risk the key government promise to stop illegal migration through close cooperation with Indonesian authorities. It could also undermine Australian efforts to adjust to power shifts in Asia, of which the potential rise of Indonesia will be one big determinant.
The South Pacific
Besides key bilateral relationships in the Asia-Pacific region, the Australian government must revitalize its engagement in the South Pacific and in Timor Leste, very much its own backyard. There, Australia is not a middle power, but a major one, given that its power potential is so much larger than those of the smaller Pacific island nations. Over the past decade, Canberra deployed the ADF and the Australian Federal Police (AFP) to various places in the region, including the Salomon Islands and Timor Leste. Moreover, the 2013 defense white paper declared the goal to play a “central role” in this region.
However, while most of the military and police missions have ended, it is uncertain if they have contributed to long-term stability in these countries. Bad governance, vast economic and social problems, as well as a growing “youth bulge,” make for a very explosive mix in many South Pacific islands. Key locations for Australia such as Bougainville, Papua New Guinea and Fiji remain highly volatile. It remains to be seen if the Abbott government will succeed in creating more-effective mechanisms to promote stability in this region. Reforming foreign aid and providing more incentives for good governance will be critical, particularly after the Abbott government dissolved the independent Australian Agency for International Development. Furthermore, external powers such as China are seeking to extend their influence in what Australia views as its backyard.
Australia’s defense policy has traditionally been characterized by a relatively small but highly sophisticated ADF aimed at maintaining a technological “capability edge” in the immediate neighborhood, a close alliance relationship with the United States and the concept of “defense self-reliance,” or the ability to conduct operations in its immediate neighborhood without the support of the U.S. The question now is if these three pillars need readjustment in the post-Afghanistan period, with most Australian troops expected home by the end of the year. In this context, upon taking office the Abbott government announced the publication of a new defense white paper within 18 months. This exercise provides an opportunity for the Coalition to distinguish itself from the previous Labor governments and offer answers to those issues.
Better Aligning Ends and Means
One of those questions is how to align very ambitious force structure plans with shrinking, or at least stagnating, defense budgets. The 2009 defense white paper announced the development of significant force projection capabilities for the ADF, including 12 new diesel-electric submarines, new amphibious ships, air warfare destroyers (AWD), up to 100 Joint Strike Fighter (JSF) combat aircraft and eight new frigates. It also painted a pretty grim picture of Australia’s future strategic environment and the potential negative consequences of China’s military modernization. Finally, the government committed to a real increase of the defense budget of 3 percent a year.
The 2013 white paper changed the strategic narrative and sounded more optimistic about Asia’s strategic trajectory, including relative to China’s rise. But it left the envisaged force structure in place despite the deepest cuts to the defense budget, as measured by proportion of GDP, since 1938. At the time, analysts pointed to the incompatibility between available budgets and planned force structure. Upon taking office, Abbott vowed to restore defense spending to 2 percent of GDP from its current 1.59 percent within a decade, subject to economic conditions. Yet it is far from clear that this promise will be met any time soon, and one wonders how the new government intends to square this circle without cutting some defense capabilities.
The Australian army is particularly fearful of cuts in manpower and equipment. Historically, it has been subject to a hollowing out of its force structure after the end of major operations. A possible way to escape deep reductions is not only to make better use of the reserves but also to proceed with the restructuring of the regular army into three multirole combat brigades, one of which is currently designated to be the backbone of a new amphibious capability. The new capability will be centered on the ADF’s planned acquisition of two large, 27,000-ton landing helicopter docks (LHD), the largest ship ever in Australia’s inventory. Australia will thus be able to make a significant contribution to humanitarian and disaster relief operations, particularly in the immediate neighborhood. The LHDs will also be a useful tool for regional defense diplomacy given that defense engagement will become more important in the post-Afghanistan period. However, another prestigious, technologically complex and expensive project to introduce the next generation of land combat vehicles, called LAND400, could prove too ambitious.
The Royal Australian Air Force (RAAF) also aims to procure a range of highly sophisticated new platforms. The JSF is by far the most expensive of these, and the original plan to acquire 100 aircraft from the U.S. will be downgraded. The reduction will also be necessary to make room in the budget for the Gillard government’s $2.76 billion decision to purchase 12 F-18 Growlers, the electronic attack version of the Super Hornet, in addition to its existing 24 normal Super Hornet jets. The RAAF might therefore end up with significantly fewer aircraft, though it would still emerge with a second-to-none air combat capability in its immediate neighborhood. This would be supplemented by current plans to introduce a new maritime patrol aircraft, the P-8A Poseidon, as well as the new C-27J strategic airlift.
Finally, Australia seeks to acquire 12 new submarines over the next decade or so. Though the Abbott government has not made a final decision, the cost for the boats could be as high as $33 billion, making it the country’s most expensive military system to date. In the event no cheaper option is found or the number of boats not reduced, the submarine program will have a major impact on other ADF modernization programs. In this context, the Royal Australian Navy (RAN) also plans to replace its aging ANZAC-class frigates and will shortly operate the two Canberra-class LHDs. Moreover, against the RAN’s preference, the government has raised the possibility of building a fourth AWD as a means to save the domestic shipbuilding industry from the so-called valley of death represented by insufficient orders causing a loss in shipbuilding expertise. The current debate about the future structure of the RAN appears more dominated by industrial considerations than about strategic necessities in Australia’s maritime environment.
The new Australian government will need to make some tough choices to realign means and ends in its defense policy. If not, the current practice of deferrals and delays in defense acquisitions will persist and potentially erode some ADF capabilities. The next Defense Capability Plan (DCP) will provide some insight about readjustments. However, it should be stressed that despite those challenges, Australia is not at risk of losing its capability edge in the near region. It is technologically far superior to any Southeast Asian country, let alone Pacific Island nations, and is on friendly terms with those that do possess some serious military capabilities, such as Singapore, Indonesia and Malaysia.
Increased Cooperation With the U.S.
A second key challenge for the Australian government is how to react to the U.S. rebalance or pivot toward the Asia-Pacific region. Historically, the alignment with a more powerful Anglo-Saxon power has been an integral component of Australia’s strategic DNA. Such alliances provided Australia with a reassurance against any potential existential threat to the continent, deemed necessary because of the country’s inability to independently defend its vast coastline against a major power. Upon settlement in 1788, the Australian colonies first became dependent on the protection provided by the British motherland in the form of the Royal Navy. After the failure of Great Britain to defend the continent against Japanese attacks during World War II, Australia turned to the United States as its new “great and powerful friend,” reflected in the ANZUS Security Treaty of 1951.
The U.S. also underwrote the stability of the Asia-Pacific region through unmatched forward-deployed military power, as well as its considerable political and economic weight. As mentioned above, the ANZUS alliance also provided Australia with a range of additional benefits, ranging from nuclear deterrence to access to military intelligence and world-class weapons technology. The alliance with the U.S. is a substantial force multiplier for the ADF, which is highly sophisticated but only comprises about 59,000 personnel. In return, Australia has proved to be a steadfast ally, contributing troops to every major U.S. military operation since 1945, including recently in Iraq and Afghanistan.
With China challenging U.S. military preponderance in the Western Pacific, the ANZUS alliance could become more costly for Australia. During his visit to Canberra in November 2011, U.S. President Barack Obama announced a pivot to Asia, a move embraced by the government of then-Prime Minister Julia Gillard and reconfirmed by Abbott. As the Pentagon prepares for the operational challenge posed by the PLA, Australia becomes strategically more important for the United States. Politically reliable, Canberra could also play an important role in the U.S. military’s emerging AirSea Battle concept. As Washington aims to move some of its forces out of the direct reach of China’s growing ballistic missile arsenal, Australia’s geostrategic location at the rim of the Pacific provides the U.S. with greater “strategic depth.” Moreover, given its geographic proximity to maritime chokepoints in Southeast Asia, in particular the Malacca, Lombok and Sunda Straits, Australian forces could contribute to a “distant blockade” in a future conflict with China.
Since 2011, Australian governments have taken first steps to provide the U.S. military with greater access to facilities in the north. Most commentary has focused on the first rotational deployment of U.S. Marines through Darwin. Indeed, in the future those forces are likely to be part of an U.S. Marine Amphibious Readiness Group. Yet it must be noted that 2,500 Marines do not constitute a strategic challenge for China, not least given the geographic distance. What is equally if not more important is that Australia also agreed to the rotational presence of U.S. air assets, including strategic bombers and tanker aircraft. It is also very likely that the U.S. military will be able to preposition vital equipment in Australian facilities. As well, during the AUSMIN talks in November, both sides continued discussions about future naval cooperation in Australia. Finally, they reaffirmed greater cooperation regarding ballistic missile defense and space, including the relocation in 2014 of a U.S. C-Band space surveillance radar to Western Australia.
Consequently, the Abbott government is so far continuing the previous governments’ policy of gradually increasing defense cooperation with the U.S. to guard against unwanted strategic developments, such as the possibility that China’s rise does not remain so peaceful. This approach includes initiatives to enhance interoperability between the ADF and U.S. forces, not least through regular exercises, embedding of senior Australian officers in the U.S. Pacific Command and acquisition of U.S. defense equipment such as the JSF and Super Hornets.
Yet, Canberra should not be regarded as “Washington’s poodle.” The Abbott government will likely resist U.S. pressure to increase the defense budget or to develop offensive weapon systems that could be seen as targeted against China. Moreover, as in the past, Australia’s military activities in the Asia-Pacific region will primarily focus on selective and limited assistance. Should there ever be a major U.S.-Sino war, Washington could most likely count on Australia for political and military support. But absent such an extreme contingency, Australia will choose its strategic engagements in Asia carefully and in line with its limited military resources and geostrategic interests.
The Future of Defense Self-Reliance
A final question for Australia’s defense policy regards the future of so-called self-reliance. There are those who argue that in a more volatile Asia-Pacific security environment and with the possibility of a partial U.S. disengagement from the region, Australia should strengthen its independent defense capabilities to deny a hostile power the air and sea approaches to the continent. They advocate significant investments in air combat systems and submarines. Others disagree, arguing that the Americans will not withdraw from Asia and that, if they do, Australia will be required to develop its own nuclear deterrent to be fully independent, a move unnecessary at this point in time.
The 2013 defense white paper qualified the concept of self-reliance in that it quite rightly pointed out that Australia would be unable to defend itself independently against a hostile major power and that for major regional operations the ADF would depend on some sort of U.S. support. This realistic assessment, however, raises the question about the utility of the concept in general. For example, what is the future level of Australia’s ambition in the South Pacific when it comes to the deployment of military force? How could it “lead” without an independent capability? What risk does an ever-closer integration into U.S. strategy and force posture carry for Australia’s foreign and defense policy? Are there scenarios in which Australia would want to deploy the ADF but cannot because of lack of U.S. support? It is hoped that the upcoming 2015 defense white paper will address some of those issues.
Australia’s foreign and defense policy are still adapting to the transition period from a focus on global engagement toward a greater emphasis on the Asia-Pacific environment and security challenges much closer to home. There are more questions about its strategic posture than answers. The key priority for the new Abbott government is to deliver on its election promises of delivering a budget surplus and revitalizing the economy. That means that foreign and defense policy will probably not receive the lion’s share of political attention in Canberra. Further, unless the economy recovers rapidly, major resources for foreign and defense policy will remain limited.
That said, Australia’s foreign and security policy will probably reflect the traditions of earlier Coalition governments, which are seen as the best way to adjust to the new geopolitical realities in the Asia-Pacific region. This approach will include close cooperation with the U.S. and other like-minded countries to maintain a favorable regional order, a preference for pragmatic solutions over new conceptual approaches such as the “Indo-Pacific” and increased bilateralism. The Abbott government will also be more willing to recognize the political-cultural differences between Australia and most of its Asian partners. That is, while there is a need for Australia to closer integrate into Asian markets, there is less need to assimilate culturally. Paradoxically, this approach could actually make its dealings with states in the region easier, not harder.
Finally, the next few years will show whether the new government is willing to make tough choices regarding the country’s defense capabilities. Its ability to do so will very much define Australia’s capability to help shape the emerging Asia-Pacific security order.
Ben Schreer is senior analyst for defense strategy at the Australian Strategic Policy Institute (ASPI) in Canberra. His recent publications include “Planning the Unthinkable War: ‘AirSea Battle’ and Its Implications for Australia” and “Moving Beyond Ambitions? Indonesia’s Military Modernisation.” He can be reached at email@example.com.