The opportunity cost of the new cold war.

Aug 27, 2020

Australia, perhaps unwittingly and with very little in the way of public debate, has unnecessarily involved itself in a new cold war between the United States and its allies on one side and Russia and China on the other.

Whilst discussions about the New Cold War have become increasingly common, the War itself is not new. Eminent historian Professor Stephen F. Cohen, in his book War with Russia?, suggests that this second cold war commenced in 2014 arguing that it is more dangerous than its predecessor. A former Swiss military intelligence analyst and widely ready geopolitical commentator agrees, claiming that until this point the New Cold War has been 80% informational, 15% economic and 5% kinetic. In recent years, and in particular since the COVID-19 pandemic, the New Cold War has expanded to include China.

If we were to accept the allegations made by many politicians, commentators and mainstream media it would appear that Russia and China are the aggressors. The informational aspects of the New Cold War have clearly been a success for the Anglosphere nations, at least amongst their own populations. Russia is guilty of the invasion of Crimea, the shootdown of MH17, interference in the 2016 US Presidential election, supporting the Syrian Government’s use of chemical weapons and the poisoning of the Skripal’s. China on the other hand is militarising the South China Sea, passing draconian laws in Hong Kong, threatening Taiwan and committing large-scale human rights abuses against the Uighur people.

What is interesting about each of these claims is that they are either false, grossly exaggerated, omit vitally important context, are being weaponised for geopolitical purposes or a combination of the aforementioned. Some examples. It now seems quite clear that the Syrian Government did not use chemical weapons in Douma, that the British narrative about Russian culpability for the Skripal poisoning is clearly absurd and that every key allegation of Russia interference in the US elections, from the hacking of the DNC (it was a leak not a hack) to Russian troll farms (indictment dropped once a defence was raised), to the dodgy Steele dossier (the key source was a convicted criminal) have been proven false. The Chinese rhetoric towards Taiwan is not matched by its actions whilst concerns over the new national security law in Hong Kong are overblown. Chinese actions in the South China Sea are a concern but the situation is far more complicated than generally presented.

Taiwan has the same claims as China over the South China Sea, multiple countries have occupied rocks and reefs in the area and China has a very real security concern/threat to worry about; namely the 11 Carrier Strike Groups of the United States Navy. Much of the coverage of Chinese actions could be described as hysterical. It is also clear that Australian criticisms are deeply hypocritical, magnifying every claim against China and/or Russia whilst ignoring the long history of far more egregious behaviour by countries such as the United States.

It has been the goal of the United States to maintain global hegemony (what the Australian Government more politely terms the rules based global order) since the end of the first Cold War. The United States, largely through its own ineptness, has failed spectacularly in this ambition. The New Cold War is at its heart an attempt by the United States and its key allies to maintain dominance against rising powers such as China and Russia. A history of empires suggests that such an attempt is doomed to failure whilst contemporary events indicate that the decline in American power is rapidly accelerating. Indeed, it now seems clear that we are witnessing the early stages of a Soviet Union style collapse in the United States.

Given these circumstances, it is very difficult to see how Australia’s close and perhaps deepening alliance with the United States is in the national interest. Of all the rhetoric against so called Russian and Chinese aggression the only real threat to Australia from this vector is the closure of shipping routes through the South China Sea. With China depending upon on shipping through this route just as much as Australia does, the most plausible risk comes not from China but from a blockade or military conflict initiated by the United States. A conflict that the United States would probably lose. Whilst Australia has refrained from the most aggressive of the so-called Freedom of Navigation Operations, the perceived threat to our maritime lifeline that is the South China Sea could well become a self-fulfilling prophecy.

Not only does Australia’s current participation in the New Cold War risk the very circumstances that we are seeking to avoid, but it comes at a great opportunity cost. That cost is the ability to address very real and far more pressing threats. Judging by the results of the 2020 Lowy Institute poll this is not an isolated view. Of the 10 possible threats to Australia’s vital interests the top five were related to environmental and economic concerns with the potential for war between the United States and China ranking last. A rational approach to dealing with an array of threats would be to prioritise those that pose the greatest risk.

Australia’s oil dependency provides a pertinent case study. In 2019 the Government released a myopic interim report on liquid fuel security of which only 114 words considered future oil supplies. Yet according to the International Energy Agency (IEA), 80% of the world’s oil supply needs to be replaced, due to the depletion of existing oil fields, by 2040. Even before the COVID-19 triggered economic depression investment levels were insufficient to achieve this, with the approvals of new crude oil production projects needing to double each year between 2018 and 2025 to avoid shortfalls. Since the outbreak of COVID-19 there has been an enormous drop in investment (32%) across the oil industry.

It is becoming increasingly apparent that future oil supplies will be insufficient to meet projected demand, potentially by a large margin. Addressing such a fundamental challenge will require an enormous, sustained and costly effort by all levels of government, business, and the broader community. Failure to do so will likely have dire consequences, of a magnitude greater and more prolonged than the current economic downturn. Yet despite this there is virtually no discussion, and about the same amount of action, on addressing what is for an oil-based economy a near existential threat.

Oil dependency is but one pressing threat to Australia. A global economic downturn, water, environmental disasters, and climate change are others. Combined each of these threats pose a fundamental challenge to every aspect of our daily lives, economic prosperity, and ultimately political stability. A key difference between these threats and that of China, is that China only becomes a threat to Australia if we make it one.

Australia is at a cross-roads. We can as a nation continue to be drawn into the New Cold War, or we can choose sovereignty and independence. One path requires very expensive submarines, fighter aircraft and long-range missile systems; none of which will assist in preparing for and adapting to the most pressing challenges that Australia faces. This is the opportunity cost of involving ourselves in the New Cold War. The other path minimises the risk of being involved in a nihilistic military conflict whilst maximising the potential to address the myriad challenges we face as a nation to attain a prosperous future. Clearly the second path is preferable but is unlikely to be successful unless we can break the nexus between those that push the national security agenda and those in political power.

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