In this excerpt from his Quarterly Essay, Michael Wesley argues Australia has misread a changing world – clinging to old assumptions, over-relying on the US alliance, and overlooking the growing strategic importance of Southeast Asia.

The Australia I grew up in prospered in a world that fostered its aspirations and strengths. It was a world in which Australia could have an expansive outlook, an ambitious vision of itself and its international preferences. It was a world conducive to small, wealthy, developed states because it was structured around institutions and processes that encouraged countries like Australia to leverage their limited capabilities to achieve outsize influence.

These institutions and processes were, first, multilateral bodies that were taken seriously and provided smaller states with a voice and opportunities to join together to advocate major change. Second, a global system of alliances centred on America, dedicated to the values that animate Australia and to ordering the world according to those values. Third, a global economy oriented towards the freest possible flows of goods, investment and technologies, giving us access to markets with strong demand for what we were best at producing, and providing us with the best available products that we didn’t produce. Fourth, we abutted a region of states dedicated to pragmatic stability and mutually beneficial economic development and which shared our devotion to the sovereignty and equality of states.

It was a world that encouraged us to be ambitious for a time, but it also allowed us to become complacent.

There were several aspects to our complacency. One was an assumption that the four foundational arrangements of the post–World War II order – multilateralism, alliances, globalisation and a benign region – were permanent fixtures, destined to be enduring because – surely – all states judged them to be as beneficial as Australia did.

Another aspect of our complacency was an expectation that Australia didn’t have to try too hard to secure its interests, because whether we put in the diplomatic effort or not, things just seemed to work out for the best for us. A third aspect was growing indiscipline in being able to specify and prioritise our fundamental national interests. Being Australia, as Howard used to say, meant not having to choose. A fourth aspect was a rising incuriousness about the societies and cultures closest to us geographically. The states in our region appeared to be so stable and predictable as to seem boring; the temptation to take them for granted became overwhelming.

To an Australia shaped by seven decades of living in a world that seemed custom-made in its favour, the last decade and a half has come as a rude shock. The authority and effectiveness of multilateral institutions have been eroded.

In recent years, American alliances appear to many states as less about order promotion and more about delivering on the increasingly erratic mood swings occurring in Washington. In Trump’s two terms, the value of security partnerships has been questioned by both the United States and its allies. And now we watch the astonishing spectacle of the US threatening a NATO ally with force to acquire Greenland.

Globalisation has succumbed to rising economic competitiveness among states and the increasing use of economic interdependence and technology systems as coercive levers. The world isn’t deglobalising, but it is fracturing. And the formerly benign region next to Australia has become subject to much greater contestation. For the first time since the end of World War II, a resident Asian power is making a serious bid to develop a sphere of interest right on Australia’s doorstep.

So sudden and simultaneous was the crumbling of these four verities of Australia’s preferred international order that they exposed how degraded our disciplines for understanding and responding to rapid international change had become.

When it became clear that Australia’s economic interests and security interests were in serious tension, there was no authoritative mechanism with which to think through what this meant and formulate a new way forward. Reportedly, the Rudd government developed a comprehensive China strategy, but its effects were not apparent, as our relationship with China lurched between confrontation and stand-off in those years.

The lack of any coordination was laid bare in 2016, as the economic ministries and security agencies remained fundamentally divided on whether Australia should join the China-initiated AIIB; in the end there was a messy and contested compromise through cabinet. In the absence of discipline and clear and authoritative processes, a combination of alarmism and careerism crept in and came to dominate our foreign, economic and security policy-making.

Hyping up the China threat served several objectives: providing a Churchillian sense of moral clarity; reassuring our ally of our loyalty; and providing impetus for rethinking the world in the familiar Manichean terms of democracy versus autocracy.

At no stage did any government between 2007 and the present think through clearly and systematically what all of this change means for Australia’s fundamental national interests. Our prime ministerial revolving door didn’t help. Instead, Australia seems to have continued along blithely with an expansive internationalist approach that it developed during an earlier, more benign era.

At a time of rising challenges in Southeast Asia, Australia developed a close interest in securing a seat on the UN Security Council, holding Russia to account for its attack on a civilian airliner, and pressing for an international inquiry into the origins of Covid-19.

Moreover, our leaders seemed to believe that whatever the challenge, the solution was investing ever more heavily in the alliance with the United States. Little thought was given to whether Washington shared our interests, because over time we have simply adopted America’s priorities.

It is not apparent that Canberra has thought as profoundly as America’s European allies have about what the rise of Donald Trump and the movement he represents means for the future of America’s role in the world, and therefore for the future of the US–Australia alliance.

We have, in effect, placed all our chips on a single bet: that the US and its strategy for facing down China will protect Australia’s interests wherever they are threatened.

We seem to be telling ourselves: as long as the United States, Japan and Australia can frustrate Beijing’s desire to take over Taiwan, the rest of our interests will be secure. There is more than an element of the old forward defence thinking here: the further from Australia we can take on China, the less likely the problem is to manifest much closer to Australian territory.

If this is the thinking in Canberra, it reflects a profound misunderstanding of the scale and nature of China’s power. More than a decade into Xi’s tenure, it is clear that while Taiwan is a priority for Beijing, it is by no means the only focus. Whether or not it is advancing its objectives in Taiwan, China is assiduously increasing its influence in Southeast Asia, Central Asia, the Pacific, Africa and Latin America. And Washington is not interested in contesting China’s influence in any of those regions except – recently – the last.

I have argued that by far the most serious challenge to Australia’s interests is the prospect of China developing a Sphere of Deference in Southeast Asia. In support of its efforts, Beijing has formidable advantages and has registered clear intent. Canberra should be in no doubt about this.

It is also clear that this danger does not feature on Washington’s threat register. Its attention is further north, on the direct threat posed to US bases in Japan, South Korea and Guam by China’s asymmetric warfare capabilities. American planners are also intensely focused on developing responses to Chinese coercion against Taiwan.

If our major ally really was concerned about China building a Sphere of Deference in Southeast Asia (as arguably it should be), it would have invested in a much more deep and sustained way in building up its commitments and credibility there. Instead, as we’ve seen, these have been eroding steadily since the end of the Cold War.

It should be clear that Australia has made the wrong bet: that relying on the US alliance to address the threat of a Chinese-centred Sphere of Deference on its northern doorstep has left it dangerously exposed and unprepared.

If anything, Canberra’s adherence to the US strategy of balancing and deterring China has led to an increasing divergence of interests and perceptions between Australia and its neighbours.

Furthermore, Australia is unwittingly playing into Beijing’s hands. Canberra’s championing of AUKUS and the increasing tendency for Australians to view the world as democracies versus authoritarian states have allowed Beijing to argue to Southeast Asians that Western states are confrontational and not to be trusted.

As a consequence, Australia is arguably at an all-time low in its ability to shape events and attitudes in Southeast Asia, precisely when it needs to have maximum influence and legitimacy.

An excerpt from The Quarterly Essay : Blind Spot, Southeast Asia and Australia’s future.