MICHAEL KEATING and JON STANFORD. Australia’s strategic risks and future defence policy (Part 1 of 2)

May 8, 2018

Part 1: Australia’s strategic environment and the US alliance

Two years ago the government selected the French company Naval Group to design Australia’s future submarine (FSM). We were highly critical of the decision at the time for a number of reasons, including the excessive cost. In particular, we are concerned by the lengthy delivery schedule for the submarines, a decade or more after the present Collins class submarines are due to be retired, resulting in a dangerous capability gap. In this series of two articles we explore how Australia’s strategic environment has evolved since the decision on the FSM was taken and what this implies for Australia’s future defence strategy and the ADF’s force structure.  

Although the actuality of Australia’s strategic environment may not have changed much since the decision on the FSM was taken, it does seem as if the world has become more dangerous, particularly in our region. While, in the past, Australia has relied heavily on the assessment that the capabilities required to mount a serious assault simply did not exist in our region, now the growing wealth of our neighbours, and particularly China, has led to an increase in their military capabilities relative to those of Australia. Consequently, the warning times for strengthening Australia’s own capabilities have been reduced, while building enhanced military capability continues to take many years and therefore needs to be planned well in advance.

In addition, the advent of President Trump together with President Xi Jinping’s increased assertiveness of China’s interests, including the development and militarisation of the island chain in the South China Sea, are further reasons why Australia needs to reassess its strategic circumstances. At worst, as the most recent US National Security Strategy report put it, ‘a geopolitical competition between free and repressive visions of world order is taking place in the Indo-Pacific region.’

In December 2017, Paul Dibb and Richard Brabin Smith stated that: “Australia’s strategic outlook is deteriorating and, for the first time since World War II, we face an increased prospect of threat from a major power. This means that a major change in Australia’s approach to the management of strategic risk is needed.” Dibb and Brabin Smith leave little room for doubt that the “major power” is China. At the same time, Hugh White, in a Quarterly Essay, Without America, addressed the contest between America and China for dominance in East Asia. He had little doubt as to the likely outcome. “America will lose, and China will win,” he wrote. “America will cease to play a major strategic role in Asia and China will take its place as the dominant power.”

In contesting regional leadership with the US, it is becoming clear that one of China’s strategic objectives is to enforce a policy of anti-access and area denial (A2/AD) against the US Navy, specifically its carrier battle groups, in the South and East China Seas. The apparent militarisation of the disputed Spratly Island chain in the South China Sea, particularly the installation of medium-range anti-ship ballistic missiles, only reinforces that view.

In 1996, China was powerless to deter President Clinton from deploying two carrier battle groups to counter its missile threats against Taiwan. This back down had a profound impact on China and appears to have given rise to a determination that it will never be repeated. Immediately following that incident, China began a rapid build-up of its naval forces that has only accelerated in recent years. Emerging technologies in land-based ballistic and hypersonic missiles will make naval task forces a threatened species in future conflicts. It is now unclear whether the US could prevail in a conventional naval war in Chinese waters. Whether China’s A2/AD strategy will also extend into the Indo-Pacific region more broadly in the medium term by the establishment of one or more forward bases remains uncertain, but this possibility also cannot be ignored in longer-term defence planning.

As Hugh White points out, regional disputes, such as those around contested islands in the South China Sea or even Taiwan, are of greater fundamental importance to the regional power, China, than they are to the US. While, in extremis, one party may be willing to go to war to resolve such issues, from the perspective of national interest it may well be irrational for the other party to take up the challenge, particularly if nuclear weapons could be involved. In regard to the 1996 Taiwan crisis, one Chinese official is reported to have told an American “you are not going to threaten us again because, in the end, you care a lot more about Los Angeles than Taipei”.

In response to another such crisis, therefore, China may not back down and it is quite possible that the US would be the first to blink. We do not know whether the US would go to war over Taiwan and we need to consider very carefully whether it would be in Australia’s national interest to support it in such a conflict. In the event of such a confrontation, and particularly under ‘America First’, the US could well decide that its future national interest would be best served by not engaging in a war with China, at least over an issue such as Taiwan. Better, perhaps, to retire to Hawaii and focus on America’s global role, particularly leadership in NATO and in the western hemisphere more generally. By default, this would mean ceding leadership in the western Pacific to China.

If so, according to Hugh White, “we need to prepare ourselves to live in Asia without America”. This would have profound implications for Australia’s foreign and defence policies.

First of all, Australians would need to consider how life might change for us with China as the dominant power. The rules-based order, as ordained by America, would be modified or could even disappear and be replaced by different and, to Australia at least, less appealing rules. Perhaps China would seek to enforce an East Asian version of the Monroe doctrine against outsiders but without seeking to intervene significantly in the domestic affairs of other countries in the region. Although the Australian Prime Minister appeared to reject the Monroe doctrine scenario in a speech in Singapore last year, ultimately it might have to be tolerated by a middle power like Australia without the strategic weight to challenge it.

Alternatively, while we accept that Chinese ambitions fall short of territorial aggrandisement beyond disputed territories, we cannot be certain that China would not go further and seek to influence the affairs of other countries in the region, including their trade, foreign and defence policies. Dibb and Brabin Smith state that: “at present, the jury is still out on China’s military intentions. Does it seek to become the dominant power in Asia, requiring all lesser powers—including Australia—to do its bidding? Or will it instead become a great power that peacefully shares power with other major powers, including the US, Japan and India? The evidence is beginning to show that it is the first proposition that Beijing’s aiming for: that it intends to use its rapidly increasing economic strength and military power to expand its strategic space through the use of coercion and the threat of force.”

Nevertheless, as Dibb and Brabin Smith acknowledge, at this point of time “it is important not to designate China as inevitably hostile to Australia”. As they then go on to say, Defence planning does not require treating ‘China as inevitably becoming our enemy’. But China is not the only country in the region that already has or will in the future surpass Australia in economic power and may pose a military threat. For example, it is not out of the question that Indonesia could become an extremist Islamist state. That might pose an existential threat to Australia.

What is important for future defence planning is to recognise, as we have noted already, that the development of military capabilities among our neighbours, and particularly China, means that the region has become a more dangerous place and the warning times have contracted compared to most of our post-World War II experience. That means that we need to plan now to start achieving the capabilities that will allow Australia to defend itself even in the worst of possible scenarios.

While the US alliance provides many benefits to Australia, one legitimate question is whether we have higher expectations of American military support in a conflict than are justified by the nature of the ANZUS treaty. It is worth remembering that unlike a treaty such as NATO, the parties to ANZUS are not necessarily bound to provide military assistance should any of them be attacked. For example, the US declined to provide active military support to Australia during the 1960s confrontation with Indonesia or in the INTERFET operation in Timor Leste in 1999, where both the UK and New Zealand provided ‘boots on the ground’ from the outset. Also, if we regard ANZUS as an insurance policy, another question is whether Australia pays a higher premium for the insurance cover than is necessary. Australia has incurred high costs as a result of the alliance in terms of involvement in wars, such as in Vietnam and Iraq, where our fundamental national interests were not obviously threatened. By contrast, most NATO countries have provided little or no military support to the US and yet their insurance policy provides higher benefits in terms of a security guarantee.

Importantly, the American alliance is not the only element underlying Australia’s defence strategy. Since it was established in the 1976 Defence White Paper, Australia has endorsed the principle of self-reliance. Since then, in Hugh White’s words, “every White Paper until [2016] has unambiguously affirmed that the principal task of the ADF is the defence of Australia from direct attack, and that it must have the capabilities to do so against any credible threat without relying on the combat forces of our allies”. He goes on to say that “the posture adopted in 1976 made sense in an era when US primacy in Asia was uncontested, so the only threats Australia had to defend itself against were those that could be posed by a poorly-armed Indonesia”. At that time, Australia was, in effect, a regional great power in economic and military terms and there were no obvious existential threats to the nation.

More recently, while in the 2009 White Paper the then government canvassed in more detail the possibility that Australia could, in the future, confront a great power adversary without US support, it did not conclude that defence policy should abandon the principle of self-reliance. In the 2016 White Paper, however, White detects an implicit downgrading of the self-reliant objective and a “return to a defence policy that assumes Australia will always be fighting alongside allies, and that the ADF’s key role is to support such allies”. If so, the government may be acknowledging the growing military strength of China and suggesting that the ADF, with its current and planned force structure, would no longer be able to defeat an attack by a major power without American military support.

To move away from self-reliance, however, would constitute a major change in our defence policy and one that is dangerously at odds with the possibility that Australia would not be able to rely on American military support in the event of a future attack by a “major adversary”. In Part 2 of this series, we consider Australia’s requirement for a self-reliant defence strategy and the implications for the ADF’s future force structure, including the particular importance of submarines.

Dr Michael Keating is a former head of the Department of the Prime Minister and Cabinet. Jon Stanford is a Director of Insight Economics and was a senior official in PM&C in the 1990s.

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