The Defence Strategic Review: Three dangerous assumptions underlying our defence planning

Oct 14, 2022
A National Guard Troop Patrols the U.S. Capitol complex

To navigate the rapidly changing international system, we must replace three dangerous assumptions underpinning Australia’s defence planning.

In 2012, the Australian Defence Force Journal published an article titled ‘Dangerous Assumptions: Australia’s defence posture’. In this article I described three assumptions underpinning Australia’s defence posture. They were considered dangerous as if proven false they had the potential to significantly undermine Australia’s security and there was a high probability that these assumptions would be proven false prior to 2030.

The three dangerous assumptions were that economic growth would continue indefinitely, that the United States would remain the most powerful and influential strategic actor globally and that the rate of technological innovation will continue to accelerate.

In the ten years since the publication of this article it has becoming increasingly apparent that each of these assumptions has or is in the process of being proven false. If current trends continue it is likely that all of these assumptions will have been proven definitively false by 2032, the period of interest for the Defence Strategic Review.

The initial consequences for Australia and the Australian Defence Force of these assumptions being proven false are already evident. The consequences will become increasingly dire for Australia’s future if our defence strategy continues to be based on these false assumptions.

A brief review of the current status of these assumptions is provided below.

Economic growth

In 1972 it was postulated that at some point in the 21st century the global economy would reach the limits to economic growth. There is a growing body of evidence that the global economy is approaching, if not at, a peak in global economic activity after which the long-term trend will be of reduced economic activity. As Nate Hagens puts it:

“It is likely that, in the not-too-distant future, the size, complexity, and (literal) `burn rate’ of our civilisation will be much reduced by forces other than human volition”

Whilst there is broad recognition amongst scientists and ecological economists that it is impossible to have “unending physical and economic growth on a finite planet” this has not resulted in a corresponding recognition by governments or incorporation into public policy.

In what may be a tacit acknowledgement that the global economy is facing limits to growth, many governments, including Australia’s, are focused on a transition to renewable energy and electric vehicles. The driving force behind this transition is to minimise the impacts of climate change.

However, there is significant doubt that a transition to renewable energy at large scale is possible. In a world first, detailed bottom-up analysis of the requirements for a 100% transition to renewable energy, Dr Simon Michaux from the Geological Survey of Finland, concluded that:

replacing the existing fossil fuel powered system (oil, gas, and coal), using renewable technologies, such as solar panels or wind turbines, will not be possible for the entire global human population. There is simply just not enough time, nor resources to do … What may be required, therefore, is a significant reduction of societal demand for all resources, of all kinds.”

A survey of contemporary economic issues (including but not limited to ‘cost of living pressures,’ rising energy prices, extreme levels of debt and central bank monetary policies) around the world is suggestive that future economic expansion will be increasingly difficult and that the global economy may indeed be approaching, if not at, the limits to growth.

The consequences of the global economy reaching the limits to growth cannot be overstated. It will have enormous ramifications across economic, political, social and technological aspects of industrial civilisation. The maintenance and generation of military capability will not be immune to these impacts.

The United States

It is clear that the power of the United States is declining across all aspects of national power in both absolute and relative terms, with a growing body of literature supporting this view (see for example Niall Fergusson, Dmitry Orlov, John Michael Greer, Victor Bulmer-Thomas, Chris Hedges and Andrei Martyanov).

A short list of indicators supporting the assessment that the United States is in decline include:

  • The United States lacks the industrial capacity to fight a modern industrial war of the type that Russia is fighting in Ukraine.
  • The unwillingness of the United States to respond to Iranian missiles strikes on its military facilities in Iraq in response to the assassination of General Soleimani.
  • Most of the world, both in terms of population and countries, is not following the United States position vis a vis Russia’s war with Ukraine.
  • Relationships with key United States allies have changed dramatically in unprecedented ways over recent years, for example:
    • Turkey, a NATO member, has purchased Russian Air Defence systems against significant opposition from the United States
    • Leaders of several Gulf States have refused to take calls from President Biden
    • Saudi Arabia is considering trading oil outside of the US dollar, the bedrock of the Petrodollar system that underpins the United States position as a global superpower.
  • Numerous war games over many years of a potential US-China conflict over Taiwan suggest that the US will ‘lose fast’.
  • There is a growing view that the institutional competence of the United States is rapidly diminishing.
  • China is producing STEM graduates at the rate of eight to one compared to the US, a ratio that is projected to increase to 15 to one by 2030. China also dominates patent applications submitting more than twice that of the US in 2019.
  • And perhaps most importantly is the move towards de-dollarisation. The US dollar as the world reserve currency is the centre of gravity of the United States. The excessive use of sanctions by the United States, the seizing of Russian dollar denominated assets and removal from the SWIFT system has highlighted how reliance upon the US dollar is a sovereign risk. Multiple countries are now moving towards the use of local currencies (including Russia, China, Iran, India, Saudi Arabia and others) in trade and developing alternative payment and settlement systems. The ability of the United States to fund its extreme debt levels is dependent upon the role of the US dollar as a reserve currency; the diminution of this status will have major negative implications for its economy and position as a global power.

Further to the external indicators of decline, the internal situation within the United States is also of great concern. Well known political scientist Thomas Homer-Dixon has argued that the United States has become ungovernable with the ‘political and social landscape flashing with warning signals.’ Discussions about a future civil war in the United States have become mainstream with opinion pieces on this topic published in major news outlets such as the Washington Post.

Joseph Tainter’s law of diminishing marginal returns suggests that the United States is well beyond the point where it can return to its previous position as the global pre-eminent power.

The increasingly risky decisions being made by the United States, such as Nancy Pelosi’s visit to Taiwan and the extensive level of support being provided to Ukraine, are indicative of a United States Government that is increasingly desperate, and as a result likely to make decisions that could lead to catastrophic outcomes.

Technological innovation

In a 2010 ADF Journal Article titled ‘Lasers or Longbows: A paradox of military technology?’ I argued that military capabilities faced a paradox:

“The advantage provided by the increased complexity of a military capability increases the vulnerability of that same capability to systemic collapse due to its reliance on complex supply chains.”

Recent events, such as COVID-19 related supply chain disruptions and the impacts of the Russia-Ukraine war, highlight just how serious a risk of this paradox is to the maintenance of both civilian technologies and defence capabilities. Semi-conductor shortages, long delays in the delivery of items such as new cars, and prolonged shortages of stock across a range of retail businesses highlight just how serious this problem is.

It is also likely to get worse in the short term with European factories shutting down or reducing output due to the high cost of energy.

To accentuate matters, this paradox is closely related to the limits to economic growth as previously discussed. If and when then the limits to economic growth are reached, the ability to maintain technologies that are fundamental to both the modern world and the generation of military capabilities alike will become increasingly difficult.

This paradox is likely to result in a significantly increased difficulty in maintaining military capabilities. This will be experienced as reduced levels of equipment availability, requirements to reduce operating hours to husband equipment (with negative impacts on training) and increased maintenance associated costs.

Conclusion

Australia’s defence posture has for a long time been based upon three dangerous assumptions. These assumptions are in the process of being proven false with a high probability that they will be conclusively proven false in the time horizon being considered by the Review. Continuing to base Australia’s defence strategy on these assumptions will likely have severe negative consequences from poor investment decisions through to failure in conflict.

Therefore, to ensure that Australia develops a defence strategy that has the best prospects of successfully navigating the tumultuous rearrangement of the international system that is currently underway it is recommended that the Review replace the current dangerous assumptions with the following assumptions as the basis for Australia’s defence planning:

  1. It is likely that the global economy is approaching, if not at, the limits to economic growth beyond which the global and Australian economies will, on average, progressively contract.
  2. The power of the United States will continue to decline in both absolute and relative terms. As a result, Australia can’t rely upon the United States for its security.
  3. Generating and maintaining military capabilities will become increasingly difficult in the future due to the reliance of advanced technologies on complex supply chains that will become increasingly unreliable.

Read more on the Defence Strategic Review

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