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Analysis. From GIS/Defense & Foreign Affairs, Canberra. The incoming Australian Government faces a crippling burden of debt, inflated governmental costs, a delicately-balanced economy, and the need for major revitalization in its defense sector and communications infrastructure.

But the strategic direction of Australia, and the structure and progress of its major defense and infrastructure programs, will only be able to be assessed and addressed when the country elects a new government, and that will happen with the Federal elections for the House of Representatives and half of the Senate seats on September 7, 2013. The ensuing new Government inherits a distorted and vulnerable economy which will determine how it addresses its strategic options — including its defense capital outlays — for a period of several years, quite apart from the impact which transforming regional and global realities will place on Australian decisionmaking.

There is no evidence that the incoming Government, which will almost certainly be led by Liberal Party leader Tony Abbott at the head of a Liberal-National Party Coalition, has a clearly-thought through national grand strategy. Certainly, the outgoing Australian Labor Party (ALP) Government had no defined grand strategy, but it was guided more strongly by almost 19^th Century socialist ideology than the Liberal-National Coalition (and, indeed, former Labor governments), and by statism.

The underpinning ethos of the Liberal-National Coalition — in lieu of a clearly-articulated ideology, strategy, or doctrine — is for smaller government, lower taxes, and greater fiscal responsibility. This tendency is diametrically opposed to the ideological convictions of the two recent Labor leaders, Kevin Rudd and (the more radical-left) Julia Gillard. As a result, the chances for economic recovery by an Abbott Government are far higher than would be the case if the ALP under current Prime Minister Kevin Rudd was re-elected. Even so, as Ms Gillard in particular envisaged, a Liberal-National Government will find it extremely difficult to un-do much of the statist structure-building and entitlement-building electoral dependency which Labor conducted in the Rudd-Gillard-Rudd administrations since Labor came to power with the elections of November 24, 2007.

The Liberal-National ethos, while favorable for the economy and national unity in the longer term, will, however, constrain defense spending in the short term, but that may be offset by the fact that an Abbott Government would strenuously sweep through the leadership at the Defence Department and the Australian Defence Force (ADF). Coincident with this may be a significant — but not comparable — overhaul of the Australian Intelligence Community (IC).

Transforming Australia’s Department of Foreign Affairs & Trade (DFAT) may prove more difficult, not merely because of the traditional bureaucratic inertia of DFAT.

And key to Australia’s short-term strategic revival and a resumption of competitiveness in a region which is already outperforming Australia in terms of growth rates will be the speed with which an Abbott Government can reverse some key taxation constraints, particularly those facing the resource industries in the Minerals Resource Rent Tax, which seemed likely to raise A$600-million (US$538-million) for the Federal Government in the current fiscal year, down from the A$4-billion projected by the Treasury in May 2011, as declining commodity prices on weaker PRC demand curbed mining profits. But more importantly, the tax served as a massive disincentive to investment in the Australian resource sector by major corporations, such as BHP-Billiton and Rio Tinto.

A number of key Liberal Party officials are now dusting off key studies on Australia’s strategic outlook and options, prepared in 2007 and 2009: Australia 2050: An Examination of Australia’s Condition, Outlook, and Options for the First Half of the 21^st Century, and Such a Full Sea: Australia’s Options in a Changing Indian Ocean Region.¹ These studies are now being dusted off by conservative policy leaders close to Liberal leader Tony Abbott.

The Emerging Political Framework: The great impetus in shaping the new Australian Government of prospective Prime Minister Tony Abbott will derive from the fact that Mr Abbott, and his key confidants, were all loyal to the person and values of former Prime Minister John Howard (who led the Government from 1996 to 2007). Mr Abbott has been discreetly challenged for the leadership of the Liberal Party (and therefore for the Premiership) by Sydney politician (member of the Federal Parliament for the seat of Wentworth, in Sydney) and lawyer Malcolm Turnbull. In the run-up to the September 2013 election, however, Mr Turnbull — who is far to the left of Mr Abbott — could not demonstrate convincing leadership skills, and his challenge for the party leadership seems to be in abeyance, at least until Mr Abbott demonstrates that he is wounded and vulnerable.²

Possibly the most significant strategic advice to Mr Abbott as Prime Minister will come from Senator Arthur Sinodinos³, who was heavily responsible — as a key civil servant — for ensuring that Prime Minister John Howard’s policies were implemented and his authority strengthened.

As well, the former Chairman of the Liberal Party of Australia, Shane Stone⁴, will always have Mr Abbott’s ear, given the reality that it was Mr Stone who ensured that the Party’s finances were always in shape to fight elections during the Howard Government years, regarded as the measure of success by the party.

The major challenges facing an Abbott Government will be related to taxes and employment, the reduction of Federal Government spending and government employment, the reduction of overall government spending, and immigration controls. An Abbott Government can be expected to relax somewhat Federal interference in the rights and roles of the states, but even though the Liberal Party is less statist than the ALP, the Liberals now in leadership position in Canberra — as opposed to the various state parliaments — are almost as centralist in their thinking as the Labor leaders. In other words, the Federal Liberal parliamentarians almost all agree that Canberra, rather than the states, should hold sway on most key issues, from education to health and resource rights. The issue of states’ rights, clearly enunciated in the Australian Constitution, has been progressively flouted by the Federal Government (and increasingly so) since Federation in 1901. This, however, is now becoming a key issue, particularly in the highly productive resource states of Western Australia and Queensland, both of which have Liberal state governments, where there is a strong sense of indignation that Canberra has been illegally expropriating revenues from the states, while returning a disproportionately small disbursement to the states.

The reality is that the bulk of Australia’s GDP and export earnings come from Western Australia and Queensland, but these states have far smaller populations than New South Wales (capital: Sydney) and Victoria (capital: Melbourne), and successive Federal governments have disbursed funding to those states where votes can be had. This has been a trend with both the ALP and the Liberal Party.

The Emerging Defence Framework: An incoming Abbott Government would, as a priority, begin a major cleaning of the Defence establishment. In order to bring the Department under control, the Government will first need to put its stamp on the leadership, even though departmental appointments are always, theoretically, apolitical. Even the present — and highly-regarded — Secretary of the Department of Defence, Dennis Richardson, is a known supporter of the ALP, and, as such, would expect to be re-assigned or retired. He had served as Australian Ambassador to the US, and then as Secretary of the Dept. of Foreign Affairs & Trade.

The incoming Minister of Defence will — as things presently stand — be the Liberal’s present Shadow Minister for Defence, David Johnston, a Senator from Western Australia since 2002. The incumbent Minister, Stephen Smith, also from Western Australia, announced on June 26, 2013, that he would not contest his seat in Parliament at the September 7, 2013, Federal election (after having served as the Member of Parliament for Perth since 1993). Smith, who is almost universally despised within the Department of Defence and the Australian Defence Force (ADF), was a surprise retention in the Cabinet when Kevin Rudd defeated Prime Minister Julia Gillard for the party leadership on June 26, 2013, and it was possibly only the knowledge that Mr Smith would serve just until the 2013 election that enabled incoming Prime Minister Rudd to retain him, given Smith’s strong support for ousted Prime Minister Gillard.

One key priority, then, for incoming Defence Minister Johnston, in September 2013, would be to determine the status of Mr Smith’s promised, but undelivered, 2013 Defence Capability Plan (DCP). Much of this involves Australian defense industrial activity, and Sen. Johnston is a strong proponent of a broad domestic defense industry. Unlike Mr Smith, Sen. Johnston is also passionate about the Defence portfolio and the Armed Forces, and has become extremely knowledgeable about the portfolio and the ADF. His devotion notwithstanding, Sen. Johnston may well find challengers for his portfolio, if not immediately, then in the near future.

In many respects, as in the recent past, Defence will be a key driver of Australian strategic policy, and while Sen. Johnston and the Liberal leadership are strongly supportive of the Australian-New Zealand-US (ANZUS) Treaty as the principal framework of Australian national security, they are by no means unaware of the ambiguity which has arisen in the country’s strategic positioning since the relative decline of US global power and the relative rise of the PRC relative to Australian interests, including both national security and commercial. Both regard improved Australian-Japanese ties in defense and intelligence as critical, and favor a delicately-handled transformation of Japan’s Constitutional constraints which have restricted Japan from broader participation in alliance defense, intelligence, and security technology issues.

Moreover, Defence remains perhaps the cornerstone element driving the volume of Australia’s intelligence effort and that, in turn, remains a key to the US-Australia relationship. In this regard, given that the Australian Signals Directorate (ASD) (until 2013 called the Defence Signals Directorate: DSD) is the substantive electronic/cyber component of the Australian IC, the incoming Defence Dept. Secretary would have a strong influence in shaping the strategic diplomacy of Australia⁵.

Some of the fundamentals of the Australian defense capital expenditure situation now seem locked in concrete: the F-35 combat aircraft commitment (although numbers have not been finalized); the proposed new submarine program and local construction (again, numbers may be changed from the present commitment to 12 boats); and the other major ship construction projects. The major immediate cost savings for the new Government will come from the withdrawal of most Australian military commitments to Afghanistan in 2014. The submarine issue is important, given the difficulty the Royal Australian Navy (RAN) has in even manning its present six Collins-class SSKs, quite apart from the low availability rates for the boats. The requirement for even more submarines than the present six-boat fleet is the size of Australia’s ocean responsibilities, and in this regard, Australia will need to work closely with its major allies: the US, Japan, and the RoK. India, while a Commonwealth partner state, is regarded as competitive with (although not overtly hostile to) Australia.

The officially-blessed visit to Australia by retired Japanese Vice-Adm. Hideaki Kaneda in late 2012 was significant. His low-key visit was substantive, and reminded Australian defense and policy audiences of the growing significance of Australia-Japan strategic ties. This will be particularly important in the area of submarine fleet development, and Australia would likely support changes in the Japanese Constitution aimed at allowing the export of Japanese security-related technologies. Having said that, the residual of public concern about Japan, given its World War II threat to Australia, is an ongoing issue, but not to the extent of Chinese concerns (real or political) about Japan.

The Diplomatic and Treaty Framework: Foreign and diplomatic policy is by no means clear within the Liberal-National Coalition, and there should be expected to be a strong element of “business as usual” — with one major caveat — within the Department of Foreign Affairs & Trade (DFAT) when the Coalition takes office in September 2013. Indeed, that “business-as-usual” approach has always been the trademark of DFAT, as it has been within the US State Dept. and the British Foreign & Commonwealth Office; diplomacy craves continuity. But there is a degree of ambiguity now at DFAT — and within the Liberal leadership — because of the transforming regional dynamic which finds Australia increasingly at the economic mercy of the People’s Republic of China (PRC).

The “one major caveat” in the Department of Foreign Affairs & Trade going forward is that, after decades of discussion, the Department is likely to be broken in two, with the Trade side of the Department becoming the Department of Trade & Investment. This has the prospect of creating a dynamic and innovative capability to improve Australia’s Foreign Direct Investment situation, something which is outside the normal culture of the Foreign Affairs staff.

The Deputy Leader of the Liberal Party, Western Australian member of the House of Representatives Julie Bishop, who has been Shadow Minister for Foreign Affairs, would take the Foreign Affairs portfolio from incumbent ALP Sen. Bob Carr with the installation of an Abbott Government. It is significant that the Western Australian domination of Foreign Affairs and Defence would continue under an Abbott Government (although Ms Bishop was born in South Australia, and only later moved to Western Australia, where her current electorate sits). Clearly, Mr Abbott has a candidate in mind for the post of Minister of Trade & Investment, and it seems logical that it could be Malcolm Turnbull, giving him the world stage he craves (while retaining responsibility for the NBN mission). This may also see Sen. Sinodinos emplaced as the junior Minister for Investment.

But the traditional post of Foreign Affairs will go to Ms Bishop, a lawyer, who is highly articulate and ambitious, and had been seen in the Liberal Party as a possible leader in the Western Australian state Parliament, where she had worked with two of the most successful Liberal premiers, Sir Charles Court, and his son, Richard Court. She subsequently held ministerial portfolios (Education and Ageing) in the Federal Government of John Howard. She is seen, however, as perhaps being influenced by former Australian Foreign Minister Alexander Downer, a fellow South Australian, who has been linked with business deals with the PRC⁶. As with all mainstream Australian politicians, the leitmotif for Julie Bishop’s strategic policy is the ANZUS Alliance, but — as is particularly the case with Western Australians, who see their economic future in continued and expanded resource trade with the PRC — is far less likely than most to see the PRC as an un-nuanced, near-term threat to Australian security. Indeed, she has almost certainly transcended the thinking and approach of her respected friend, Mr Downer.

As Minister, Julie Bishop would have access to intelligence product directly from the Australian Secret Intelligence Service (ASIS), which is under the ambit of DFAT, as well as from the whole Australian IC.

It is likely that incoming Minister Bishop may well, as a very early decision, replace Australian Ambassador to the US Kim Beazley, a former ALP leader who is now on an extended term as Ambassador. It is not inconceivable that she — or the new Prime Minister — could approach Alexander Downer for the post, although Mr Downer may see that as an unattractive offer, even though the post usually reports directly to the Prime Minister rather than the Foreign Minister. One issue is clear, however, and that is — as Liberal front-bencher Malcolm Turnbull has made clear — that the Liberal-National Coalition has no high-profile candidate for Ambassador to Washington, DC, who could find approval from US Pres. Barack Obama. This, however, reflects the traditional Australian governmental/diplomatic approach to the US: that only relations with the Presidency and Administration matter. As a result, Australia has traditionally neglected to develop the requisite relations with the US Congress, something which hurt Australia badly during the negotiations for the US-Australia Free Trade Agreement. In any event, it is far more important that a new Australian ambassador represents not friendship with Mr Obama — who will be out of office soon — but the interests of Australia.

The Outlook: A Liberal-National Coalition Government seems certain to come to office in Australia by September 8, 2013, but it may lack control of the Senate, which would hamper the introduction of governmental, economic, and national security reforms proposed by incoming leader Tony Abbott. It is not inconceivable that Mr Abbott could move for a full “double dissolution” of Parliament within a year of the 2013 election, merely to sweep away the remnants of Greens and other opposition elements while the Liberal-National coalition still has popularity. Only by winning dominance in both Houses of Parliament would Mr Abbott have the kind of authority needed to reverse some of the massive history made on the ground by Labor.

Even without that, it should be assumed that the Coalition would move to repeal some of the Labor taxes, but it would equally be necessary to reduce the size of government employment (for fiscal as well as ideological reasons) if the new Government is to be able to operate at a surplus. Thus, a spike in unemployment should be seen as one of the early signs that the Government is prepared to do what is necessary to balance the budget and the economy. Failure to do that at an early stage — the honeymoon period — of the Government’s term would be seen as a real sign of weakness in the Abbott leadership; he may not get another chance to be so bold.

The Abbott Government will begin immediately to incentivize domestic and foreign investment, particularly in the resource sector, the fastest route to sustaining and boosting employment. Tax incentives — the principal tool to getting that investment moving — would also encourage small and medium business enterprises to resume hiring practices. However, there are no indications that the Federal Government would move to ease the bureaucracy associated with the Goods and Services Tax (GST: sales tax), which has been a major disincentive to small business development in recent years. Mr Abbott’s strengths, like those of former Prime Minister Howard, are in his economic team, in particular Sen. Sinodinos and Western Australian MP Christian Porter, and others.

In essence, the thrust of an Abbott Government should be seen as cleaning and tightening government rather than embarking on major new or radical paths. The most significant development could be in incentivizing the exploitation of Australia’s massive shale oil and gas reserves, and possibly relaxing the politically-driven “environmental” constraints on the Australian coal industry. If, indeed, the Abbott Government reflects its parentage in the Howard Administration, then it would be a Government which is more about management than about innovation or new courses (either in domestic or foreign arenas). In that sense, then, it is likely to remain a reactive government, rather than one which takes major new initiatives. Even so, within that framework, it is likely to add momentum to talks with regional allies, from Japan and the Republic of Korea and the ASEAN community and India. The Indian Ocean (and, indeed, the Australian West) is likely to remain outside the primary focus of Canberra, although the Indian Ocean should feature more strongly than in the past.

Relations with Indonesia should be expected to have some controversial aspects, as Jakarta begins to explore what its own new wealth can bring, and as Australia finds itself pressured by Jakarta’s lax control over illegal immigration to Australia via Indonesia. That will assist in bringing the West Papua independence movement into a place of prominence in Australia-Indonesia relations, something not wanted by either Canberra or Jakarta. Thus, the 2014 Indonesian Presidential elections will be of critical importance for Australia.

Footnotes:

1. Copley, Gregory R., and Pickford, Andrew: Australia 2050: An Examination of Australia’s Condition, Outlook, and Options for the First Half of the 21st Century. Melbourne, 2007: SidHarta Publishers. ISBN: 978-1-921206-83-2. And Copley, Gregory R., and Pickford, Andrew: Such a Full Sea: Australia’s Options in a Changing Indian Ocean Region. Melbourne, 2009: SidHarta Publishers. ISBN: 978-1-921362-62-0. Both studies were initially sponsored by Future Directions International, a Perth-based research organization, which subsequently — under new management — became a left-leaning and populist institute.

2. However, even before the September 7, 2013, election, Mr Turnbull had “floated” the idea that he should be Defence Minister, through an article in The Australian by left-leaning Foreign Editor Greg Sullivan on August 22, 2013. The article speculated that left-leaning Mr Turnbull would be best-placed in an Abbott Government to deal with US Pres. Barack Obama. The article may well have had the opposite effect than intended: consolidating antipathy toward Mr Turnbull within the Liberal Party elite. Still, it shows that Mr Turnbull will be a disruptive element in the Abbott Government and will not be content to deal with the domestic issue of the National Broadband Network (NBN) project to which Mr Abbott assigned him.

3. Arthur Sinodinos, born in Newcastle, New South Wales, on February 25, 1957, has been a Liberal Party senator from New South Wales since November 2, 2011. He presently lives in Rose Bay, a Sydney suburb. He became an investment banker when he left government service. He is of Greek parents, and is an active member of the Greek Orthodox Church. His real power in Australian politics, however, stems from his effective service as Chief of Staff to then-Prime Minister Howard from 1997 to 2006, which followed earlier service (1987-89) to Mr Howard when he was Opposition Leader. He also worked with Mr Howard again in 1995. His early career was with the Australian Dept. of Finance and then the Dept. of the Treasury.

4. Shane Leslie Stone is a highly-experienced lawyer (Queen’s Counsel: QC), and a former Chief Minister of the Northern Territory (May 26, 1995 to February 8, 1999); he was born in Bendigo, Victoria, in 1950. He is now a resident of Brisbane, Queensland. He became Federal President of the Liberal Party of Australia in 1999, and became indispensible as a financial manager for the party, and as a campaign strategist for Prime Minister Howard. He is also involved in the 2013 Federal election campaign on behalf of the Liberal Party. A confirmed monarchist, he also was Federal President of the Order of Australia Association (Mr Stone has the highest rank of the order, Companion), and actively supported — like Sen. Sinodinos — the Greek Orthodox community (although Mr Stone is a Roman Catholic).

5. Ian McKenzie, the Director of ASD, announced at the beginning of August 2013 that he was to retire in December 2013 to pursue private activities. A new Director is being sought.

6. Indeed, Mr Downer’s record as Foreign Minister (1996-2007) and subsequently (2008-present) as Special UN Advisor on Cyprus was regarded as fairly mainstream, if long in tenure. He is presently on the Australian board of the PRC telecommunications company Huawei, and, after leaving Parliament and in his private capacity, he controversially promoted Huawei’s and PRC interests in Australia. He indicated in mid-2013 that he might contest the leadership of the South Australian Liberal Party, an indication that he would continue to have influence in the Federal party as well, possibly, with Julie Bishop and DFA.

August 5, 2013

Australian Elections Posit Significant Strategic Changes

Analysis. From GIS/Defense & Foreign Affairs Canberra. Australian Prime Minister Kevin Rudd had, by Sunday, August 4, 2013, run out of maneuvering room and had to fix the date for the next Federal Parliamentary elections. He set them for September 7, 2013, at least moving them from the date which former Prime Minister Julia Gillard had set, which would have put them on the date of Yom Kippur, and upsetting the small Jewish voter base in the country. As it is, the new date is one day later than the Jewish New Year, Rosh Hashana.

However, the significant issue around which the election pivots is the economy. Rudd’s Australian Labor Party (ALP) took over government with a massive budget surplus; it leaves with a massive budget deficit, and with the latest budget, posted several days before the election announcement, showing that government revenues would be A$33-billion ($29-billion) less than forecast over the coming four years, largely thanks to declining Australian income from mineral purchases by the People’s Republic of China (PRC).

Mr Rudd had, since staging a parliamentary coup to topple the ALP’s then-leader (and Prime Minister), Julia Gillard, on June 26, 2013, been gaining voter confidence, but not, at this stage, sufficient for him to bring the ALP into likely contention to retain office after the next election.

The question, however, remains: what would a new Government, under the Liberal-National Party Coalition, be able to do? Significantly, it would almost certainly face an ALP opposition which looks set to be stronger than it would have been if Julia Gillard taken the party into the election. Within this framework, the Liberal-National Coalition may not make sufficient gains in the Senate — one third of Senate seats will be contested on September 7 — to control that house, which means that it would remain difficult for the new Government to easily pass through the critical legislation it would need to pass to eliminate much of the ALP’s legacy of waste.

Moreover, the declining economic position and the inability to make as many radical steps to address that situation as necessary, would likely make the leadership under a Liberal Prime Minister — Tony Abbott, 55 — difficult. Arguably, with all the key export markets for Australia going soft (the PRC, India, the US, the EU), Australia’s options may have to include looking at ways to stimulate local production and consumption, and attempting to revive industry to the point where some import substitution would again be possible. This would almost certainly entail consideration of a more nationalistic view of trade, including a reconsideration of tariffs or trade controls, after a period when, ironically, Australia had become one of the least tariffed countries in the world.

Defence would almost certainly continue to suffer from tight spending controls, and it seems logical that, even though the ALP Government had only recently drafted a new Defence White Paper, the new Government may need to plan a serious review of what Australian national security actually required, and what it actually could achieve, over the coming few years. This would certainly be a challenge welcomed by the present Shadow Defence Minister, Western Australian Senator David Johnston, 56, who has spent his entire Parliamentary career specializing in defense issues.

Sen. Johnston is profoundly supportive of Australia’s traditional defense mission, and of Australia’s strategic alliance with the United States. However, the strategic terrain has broadened dramatically for Australia, and Australian interests now look as much to Asian partnerships and realities as those dictated by Washington. Australian-Japanese defense relations may, in fact, figure much more significantly (albeit perhaps more discreetly) than ever before, including the need for Australia and Japan to cooperate on the new Australian submarine program. That program needs Japanese technology, given that European and US technology for a conventional, blue-water submarine which could exceed the capabilities of the existing RAN Collins-class boats is not readily available.

July 20, 2013

Australia’s Phony Political War and Difficult Future

Analysis. By Gregory Copley, Editor, GIS/Defense & Foreign Affairs. Julia Gillard, before she was removed by her own Australian Labor Party (ALP) as leader — and therefore as Prime Minister of Australia — on June 26, 2013, had said that elections would be held on September 14, 2013. It was, essentially, the last possible date before the Government’s mandate had run its course. Her successor, Kevin Rudd — who returned from his own ouster on June 24, 2010, as Prime Minister and Party leader by the Gillard faction — immediately began open politicking for the forthcoming election.

Rudd was capitalizing on the polling reality that a Gillard-led ALP would be decimated in the Federal parliamentary elections, and that he could raise Labor’s success rate, albeit with little likelihood of winning the election. As a result, he was campaigning on a series of rash promises which could not be funded in the economic climate which saw the successive Rudd and Gillard administrations transform a massive financial surplus into close to $300-billion of debt. But Kevin Rudd was banking on being able to blame the Liberal-National Coalition, which was likely to win the election, for not being able to deliver the kind of public largesse that he had promised voters.

Rudd, meanwhile, had, by July 19, 2013, still not actually called the election date, dissolving Parliament so that the parties and politicians could begin their election campaigns. But there was every indication that he would suddenly resign the Government and call for new elections in late August 2013, a few weeks ahead of the Gillard date. This would minimize the Opposition’s time to run a campaign, while he was — as Prime Minister ostensibly of the entire nation — using the pre-election period to campaign (by any other name) for his own faction, the ALP.

One commentator noted: “Mr Rudd is making a lot of very popular and well-received promises that have absolutely NO chance of being fulfilled. Why? Because, when parliament resumes, those promises will be debated and must be passed by the house as well as by the Senate. Virtually all columnists who comment on his promises unanimously agree that (a) the Australian Federal Government is so deep in debt that it cannot afford to keep Kevin Rudd’s promises and (b) the senate, if not the House of Representatives will not pass the legislation needed to keep those promises.”

The British political journal, The Spectator, said in a report from Australia on July 4, 2013: “The center of [Kevin Rudd’s] dysfunction is not simply his ruthless political ambition — and the treachery, betrayal and frantic 24-7 mindset that go with it — although that trait certainly explains why so many of his colleagues have resigned from the cabinet ministry and/or parliament.”

“Nor is the root of his problem his longing to be all things to all people. Most of what depresses and even disgusts people about Mr Rudd now was visible in 2007 when he ran against [outgoing Prime Minister] John Howard. His salient characteristics were trickery and fakery, the chameleon appeal to all sides at once, which helped him persuade the so-called Howard Battlers to come home to Labor without being embarrassed to tell their mates they were doing so.”

“From the outset, however, his leadership was an exercise in bad faith. From border protection and carbon pricing to economic reform and fiscal policy, Mr Rudd was always trying to say too many things to too many different people. ... [N]othing has changed.”

What the Rudd-Gillard-Rudd successive Labor governments achieved, however, was to put Australia into a massive debt situation, at the same time as presiding over an accelerating national de-industrialization — begun under the Liberal- National Government of John Howard — which left the economy essentially dependent on the People’s Republic of China (PRC) as the overwhelming client for Australian resources and a major supplier of consumer goods (including food) to Australia. That would be tolerable, albeit dangerous, under normal circumstances.

Under conditions of a nascent and accelerating PRC economic contraction (coupled with a slowdown in the Indian economy, Australia’s fourth biggest export market), Australia’s economy faces a period of massive disruption.

This writer¹ noted in a major study, Australia 2050², in 2007: “A rapidly-transforming and, in many respects, unstable global political climate during the first decades of the 21st Century means that Australia will be challenged more than ever before to balance its trade relations to maximize gains, while ensuring there is not an over-reliance on a single partner. Even though the People’s Republic of China is now Australia’s number one trade partner, the possibility cannot be discounted that it may suffer reverses, and potentially transform into another configuration due to societal pressure from environmental damage, market reverses internationally, lack of resources, and/or even food and water disruptions, leading to societal tensions.”

But it was not merely the Government(s) of Australia which failed to heed that warning, it was also the major economic sector, comprised of the mining and resources corporations.

Bloomberg, the financial news-wire, reported on July 19 2013: “China, the No. 1 destination for shipments from Indonesia, Taiwan, Thailand and South Korea [and Australia], reported July 15 [2013] that expansion slowed for a second quarter.” The PRC economy had grown at 7.5 percent (annualized) in the second quarter of 2013, down from the same period in 2012, and following a series of quarters of annualized growth rates under the eight percent level deemed necessary to sustain the kind of trade revenues on which countries such as Australia are now absolutely dependent.

Indeed, so closely bound is the Australian economy to that of the PRC, that on April 8, 2013, then-Prime Minister Julia Gillard announced that the Australian dollar was set to become only the third currency after the US dollar and the Japanese yen to trade directly with the Chinese yuan. But the PRC is hardly as dependent on Australia as the other way around.

The challenge facing the incoming Government of Australia — presumably one led by Liberal Party leader Tony Abbott — will not only be how to manage a de-coupling of the overwhelming Australian dependence on the PRC, but to also wind down the massive Labor-generated public spending and “entitlements” (vote-buying) policies. In other words, while the economy is being hit with potentially a major decline in export earnings, directly affecting employment in the resources sector, it must also scale back government hiring and public benefits. This “double jeopardy” would best be handled early in a new government’s term in office, and ideally handled by a government with a very substantial majority in both houses of Parliament.

Kevin Rudd’s attempts to save the ALP vote — and his own prestige — may well have an effect, cutting into the new Government’s majority, thus making any necessary difficult decisions all the more courageous if, indeed, the new Government has the will to tackle them on the scale required. The only bright spot on the Australian economic horizon is the possibility that its South Australian Arckaringa Basin shale oil deposits (233-billion barrels, est.) may soon be developed, reversing the country’s present oil deficit.

Reviving Australian productivity and industry may be more difficult.

Footnotes:

1. This writer, Gregory Copley, was made a Member of the Order of Australia in 2007 for his contributions to strategic analysis.

2. Copley, Gregory R.; Pickford, Andrew, et al: Australia 2050: An Examination of Australia’s Condition, Outlook, and Options for the First Half of the 21st Century. Melbourne, 2007: SidHarta Publishers. ISBN: 978-1-921206-83-2. The study is outlines the grand strategic context and the framework for creating an Australian national grand strategy through to the mid-21st Century.

June 26, 2013

Australian “Palace Coup” Against Prime Minister Gillard Strengthens Labor, But Not By Much

Analysis. From GIS/Defense & Foreign Affairs Canberra station. Australia’s election on June 26, 2013, through an internal ballot of Australian Labor Party (ALP) Parliamentarians of a new stop-gap Prime Minister — Kevin Rudd — was not expected to change the outcome of the September 14, 2013, scheduled Parliamentary elections.

That Federal election was still expected to bring the Liberal-National Party coalition back into government, and with that a reversal of the increasingly statist/socialist tendency in the society and economy. Even so, the move by the ALP to switch leaders in the run-up to the election will make the campaign far more dynamic than it would have been.

Meanwhile, senior sources in the Australian Defence Force and Department of Defence told GIS/Defense & Foreign Affairs that they were delighted that the change in leadership could mean an early removal of Defence Minister Stephen Smith “before he totally destroyed all morale and effectiveness” within the Australian defense establishment. However, Mr Rudd did not, in fact, switch ministers at Defence initially, and could go into the election with much of the Gillard Cabinet still intact.

The widely anticipated “coup” within the Federal Parliamentary delegates of the Australian Labor Party (ALP), removing Prime Minister Julia Gillard from leadership of the Party — and therefore from her position as Prime Minister — on June 26, 2013, was taken at the last possible time by the Party. ALP members who supported former Prime Minister Kevin Rudd hoped that the election of Rudd would at least enable the ALP to suffer a slightly less ignominious defeat during the scheduled September 14, 2013, elections.

Rudd, who had himself been overthrown by Gillard in a similar putsch within the ALP during his period of leadership, barely succeeded in his latest bid to unseat Gillard, largely because he remains roundly despised — not merely disliked — by virtually all his colleagues serving with him in the ALP benches in Parliament. They voted for his return not because he was a good Prime Minister or one loyal to his companions, but because with him at the helm, the ALP looked likely to lose a few less seats than it would have done if Gillard had led them into the election.

It was a coup, in essence, supported so that some of the Labor parliamentarians could stand a chance of retaining their seats at the election. And incoming Prime Minister Rudd has said he would ensure that his new Administration would not “lurch to left”, despite the fact that he retained many of the extreme-left faction in his initial cabinet line-up.

Rudd, who had courted the media more than his own party members, will now make the election more interesting in the public domain, and will force Opposition (and Liberal Party) leader Tony Abbott to refine his argument to the electorate. But Rudd’s public image, too, has declined, largely because he has been so widely perceived as making all issues subordinate to his own ambitions, and in such endeavors his disloyalty and shallowness have become more evident.

Still, the media in Australia — which is largely well left of center, but not as far left as Gillard — finds him someone they can support, despite the fact that he, too, like Gillard, has spent the financial surplus they had inherited from the Liberal-National Coalition Government, and had plunged Australia into debt and rising taxes.

Mr Rudd named Anthony Albanese, a politician from the state of New South Wales, as Deputy Prime Minister, but that selection from what the media referred to as a “shrinking talent pool” of Labor politicians, after those who supported Ms Gillard were eliminated, may not help him electorally.

May 6, 2013

Australia’s New Defence White Paper: Serious, But Working in an Uncertain Climate

Analysis. From GIS/Defense & Foreign Affairs Canberra Staff. Embattled Australian Prime Minister Julia Gillard on May 3, 2013, unveiled Australia’s new Defence White Paper, a year ahead of its originally-scheduled release. It was a substantially more serious document than the 2009 Defence White Paper, and began to get to grips with the realities of Australia in the new strategic environment, particularly with regard to how Australia should, in a sense, “choose” between its alliance with the US and its growing relationship with the People’s Republic of China (PRC).

The authors of the new White Paper were skillfully guided by a non-Defence Dept. project leader who understood that the paper had to meet the Gillard Government’s commitment to constraining defense spending. Yet, despite this, the White Paper still provided scope for a creative and realistic approach to the strategic threat environment, and the need for some new capabilities. In that sense, the Paper was a well-crafted balancing act, and with that in mind, the Opposition — under Liberal Party leader Tony Abbott, who seemed likely to become Prime Minister after the September 2013 elections — appeared to have little substantive criticism of the new White Paper. This was almost certainly because Mr Abbott was aware that he would have a difficult time raising defense spending under his new Administration, in the short term, given the absolute destruction of the Exchequer by Ms Gillard’s spend-and-spend approach to buying votes.

But it was also true that the Opposition had few creative ideas as to how to challenge the strategic framework of Australia’s areas of interests, as outlined by the apolitical framers of the new White Paper. The Liberal-National Party Coalition, which was almost overwhelmingly favored to come to office in September 2013, has said little about how it would realistically address the transformation of US global strategic power and the rise of the PRC’s capabilities and interests, as well as, indeed, those of India.

Indeed, the Opposition could not challenge one of the growing foundations of Australian defense and strategic policy, which calls for greater military and military-industrial cooperation with Japan, and, perforce, South Korea (RoK).

But the reality will be more complex than that.

It has been known for some time that the Australian Defence Force (ADF) would swing back to closer engagement in the closer region around the Continent, following withdrawal of forces from Afghanistan. The document makes a strong statement of intent to deepen relations with Indonesia and re-invest in defense cooperation with Papua New Guinea (reviving the earlier Defence Cooperation strategy which Australia had with PNG and the South Pacific). Along with the growing strategic relationship with Japan, these three relationships — Japan, Indonesia, and the PNG — could easily be fast-tracked at little dollar cost.

More, however, would need to be done to think through the idea of an “Indo-Pacific strategic arc”, but that’s a far more realistic way to think about Australian interests than the Gillard Government’s simplistic and populist approach in its Australia in the Asian Century White Paper , released in October 2012. Indeed, more would need to be done in line with the 2009 study, Such a Full Sea: Australia’s Options in a Changing Indian Ocean Region¹, which outlined — well in advance of the present Gillard Government’s approach, exactly the transformations now becoming evident in the Indo-Pacific region. But the framers of the new Defence White Paper were aware of that — and the Indian Ocean study — and began to move Defence Dept. thinking toward realistic considerations of Australia’s interests in Africa, the Middle East, and the Norther Tier, as well as in Europe and Latin America.

Most importantly, the White Paper also finally tackles the question — much talked around instead of about in Australia — of having to choose between the PRC and the US as a strategic partner. Neither state wants Australia to choose, nor is it in Australian strategic interests to do so for the immediate or foreseeable future (not that the “foreseeable future” is necessarily a very long period).

Judgments about the longevity and value of the US’ strategic role in the Asia-Pacific have clearly been examined and the conclusion unsurprisingly reached that the ANZUS alliance (Australia, New Zealand, US) remained central to Australian interests. But the White Paper’s authors did not take the opportunity to advocate a speeding-up of cooperation by Australia with the US on Marine Corps and US Air Force and Navy deployments to Australia. It may be that the US itself signified quietly — as it did at the AUSMIN joint US-Australia ministerial meetings in Perth in November 2012 — that it did not wish to push ahead as keenly on expanding these deployments as Canberra had hoped.

But there were positive statements in the policy paper about opportunities for new cooperation with the US in areas of “space”, which is, essentially, a new term in “cyber power”, and on ballistic missile defense.

Military capabilities-wise, the 2013 Defence White Paper reprises much of the ground covered in the Force Posture review study of 2012.

All told, the strategic positioning of the ADF in the White Paper represents what Canberra defense insiders have called — with some relief — “a balanced and sensible approach”. Much of the regional engagement activity advocated is low-cost but high-value, which is right focus for Defence, given its budget constraints at the moment. The White Paper’s strategic assessment is by far the most professional statement of the present Government’s approach to regional security that has been seen. The budget picture however, remains poor for Defence, notwithstanding a small injection of funding to pay for the acquisition of Boeing E/A-18G Growler electronic warfare aircraft [see below].

In military structure/hardware terms:

1. Australia remained committed to buying the advanced Lockheed- Martin/BAE F-35 Joint Strike Fighter, but had slipped acceptance dates for the bulk of the initial force (of 14 aircraft) so that the F-35 would not be in Royal Australian Air Force (RAAF) service until 2020, creating a capabilities gap in the force structure;

2. The RAAF would, as expected, buy an additional 12 Boeing Super Hornets, configured in the E/A-18G electronic warfare Growler version, giving the RAAF a total of 36 F-18 Super Hornets in total, gradually replacing the basic F/A-18 (basic) Hornets as they end their service lives. The Growler acquisition, although much touted by Defence Minister Stephen Smith, does not compensate for the delay in the F-35 acquisition, but the Government and ADF are aware that the F-35 program itself is becoming problematic from a cost and capability standpoint;

3. The Government committed to buying 12 new submarines, based on an evolved version of the Royal Australian Navy’s (RAN) six existing Collins-class SSKs. The Government also ruled out buying an existing model of submarine from a European manufacturer because none of these matches the capability even of the existing Collins-class boats. There is, although not mentioned openly, the chance of cooperation with Japan on submarine technology, presupposing a change in Japanese defense technology export rules;

4. The RAN supply ships HMAS Sirius and HMAS Success would, under terms outlined in the White Paper, be replaced;

5. The Government plans to accelerate plans to replace the RAN’s marginally-successful, aluminum-hulled Armidale-class patrol boats;

6. No plans were announced in the document for a fourth air warfare destroyer (AWD), although this was still seen as probable.

Overall, the Defence White Paper of 2013 was far more conciliatory toward the PRC than the 2009 White Paper, something which brought an immediate and positive response from Beijing. Indeed, the Government, through the documented, welcomed the PRC’s rise and the modernization of its military as a legitimate outcome of Chinese growth.

Unlike the 2009 White Paper, new document makes no commitment to a particular level of defense funding, given that, as a percentage of GDP, Australian defense spending is at its lowest level since the 1930s, when the country was regarded as virtually defenseless. However the Government did hint — outside the White Paper context, and therefore with no real commitment — that it would like to move back toward a spending level of two percent of GDP. Spending would, given inflation, rise in absolute terms, however. Indeed, the Government, in the document, argued that since 2000, defense spending had been consistently under two percent of GDP.

It is ironic that the Gillard Government, which has maintained that Australia’s economic performance was unparalleled in the industrialized world — which was not true, and, indeed, Australia has been de-industrializing, in any event — and yet it now talked in terms of constrained defense spending in a constrained economic environment.

The document also noted: “The Government remains committed to maintaining an ADF workforce of approximately 59,000 Permanent [ie: uniformed] members [not including Reservists], noting that in the aftermath of the drawdown from Afghanistan, Solomon Islands and Timor-Leste, retention will be a challenge.”

Where the new Australian Defence White Paper is solid and professional, it is the work of a polished team of analysts; and this iteration — unlike the 2009 document — appeared to minimize the blatantly political aspects. It still served to make the case to minimize the need for increased defense spending, and it minimized the potential challenge which the PRC could make to Australian interests, unlike the 2009 document, which took a fairly stark view that Australia would inevitably have to face a regionally-dominant PRC.

In some respects, the 2013 Australian Defence White Paper took a “terrain neutral” view of the future, not betting on which way the global balance would change, other than the obvious observation that the US was to be more challenged in capabilities in the near term by rising PRC reach. It paid lip-service to the growing significance of cyber-space, but did not add granularity to the Australian debate as to how to address this strategic arena. We do know that Australian plans to create an integrated governmental capacity — including Defence — to address cyber threats have essentially foundered for the time being.

The White Paper did reference the myriad of other governmental papers on national security, but what has become apparent is that Canberra — as Washington, DC — has in some senses begun to confuse studies with action, and sees white papers as a collegial method of avoiding leadership and direct responsibility. The new document, for all that it has a far more keen grip on reality than some of its predecessor reports, does not address some of the failures and internal schisms about what is necessary to prosecute national security goals.

The way, for example in which the recent decision was made to acquire 10 C-27J Spartan twin-engine light transports for the RAAF was a case in point. Clearly, this represented a victory for the Air Force over the Army, which probably would have been better served for its in-theater needs with more CH-47D Chinook helicopters. But the Air Force has fixed wing assets; the Army the rotary wing. The decision was made, then, more on political grounds than practical.

The White Paper showed Australian Defence fighting a rear-guard action to retain capability, but also reflected the Government’s lack of a clear view of the future.

Footnotes:

1. Copley, Gregory R.; and Pickford, Andrew: Such a Full Sea: Australia’s Options in a Changing Indian Ocean Region. Melbourne, 2009: SidHarta Publishers. ISBN: 978-1-921362-62-0.

March 31, 2013

Australia Now in Position of Governmental Paralysis as Governing Party Implodes and Polarizes

Analysis. From GIS/Defense & Foreign Affairs Canberra Station. Australian governance has entered a period of paralysis which may last anywhere from six weeks to six months, with the potential for significant negative effects for the Australian economy. The waves of corruption and malfeasance scandals which have plagued the governing Australian Labor Party (ALP) administration of Prime Minister Julia Gillard are coming to a head, and the party’s popularity has continued to plummet.

However, there is also the prospect that the financial markets may begin to react positively to a now-certain change — within six months — to an economically more conservative Government being put in place. In the meantime, Australia now has the most left-leaning Government in its history.

See:

“A Putsch in Progress in Canberra?”, in Defense & Foreign Affairs Special Analysis, March 19, 2013; and

“Expected Putsch in Australian Governing Party Fizzles, But Government Falters Nonetheless”, in Defense & Foreign Affairs Special Analysis, March 25, 2013.

Prime Minister Gillard — emerging from the attempted putsch against her by her own party on March 21, 2013 — re-shuffled her cabinet on March 25, 2013, a few months before a scheduled election, and the second time in two months, attempting to put a face of normalcy on the deepening crisis which has beset her Government, compounded by the attempt within her party to remove her from leadership. And in her embattled position, she was forced to put known incompetents or neophytes into ministerial slots because they were among the remaining few loyalists shoring up the extreme left wing of the governing Australian Labor Party (ALP) administration.

Miss Gillard left Defence Minister Stephen Smith in his portfolio as well a her hand-picked Foreign Minister, Bob Carr, who was appointed to a vacant Senate seat and has yet to be elected to a Federal seat. Smith, known to have long harbored leadership aspirations, moved in February and March 2013 to offer support to Gillard, knowing he could not muster the votes for a challenge to the incumbent Prime Minister. He continues to preside over the Gillard Government’s determination to hollow out Australia’s defenses, and in March 2013 made it clear that the Australian Defence Force (ADF) contingent in Afghanistan’s Uruzgan Province would soon be withdrawn. Defense spending is undergoing a significant reduction.

Miss Gillard’s desperation in turning to Bob Carr — a former Premier of the state of New South Wales whose party has continued in that state to throw up evidence of long-term corruption and ineptitude — to be appointed as a Senator and Foreign Minister reflected a paucity of choices in 2012. After the coup attempt of March 21, 2013, she has even fewer intellects in her selection pool in Parliament. As a result, she finally promoted one of the more shallow and self-serving — and junior — politicians, Gary Gray, to a full ministerial position in her March 25, 2013, shuffle.

In many senses, the new Gillard Cabinet is meaningless; the Government itself is paralyzed and cannot transact serious business in Parliament. Indeed, the Government could face a collapse within weeks — when the Parliamentary recess ends in May — when it attempts to pass a budget. Such a failure would trigger an early election. Miss Gillard’s only good fortune, then, was that, in the days after the coup attempt, Parliament went into recess, sparing her further legislative embarrassment. But what this means is that, until the elections in September 2013 (or earlier, if a no-confidence motion topples her), Miss Gillard can only preside over a stagnation and declining national credibility in the investment markets,

Nonetheless, she has named a new slate in her Cabinet, and in the process reinforced the extreme leftwing position of the Government, in many respects because she could not count on the support of the center and center-right factions of the Party. She replaced four ministers and a parliamentary secretary, supplanting those who either resigned or were dismissed after the leadership challenge:

Anthony Albanese: Promoted despite being a strong supporter of former Prime Minister Kevin Rudd, who had been the center of the leadership challenge. Mr Albanese — now being named in blogs as having frequented a sex-oriented “massage parlour” — was named Minister for Regional Development and Local Government, formerly Simon Crean's responsibilities. He retained his portfolios of Minister for Infrastructure and Transport, and his role as the Government's Leader in the House of Representatives.

Jason Clare: Joined the inner Cabinet while retaining his current portfolios of Minister for Home Affairs and Minister for Justice. He became Appointed Cabinet Secretary in February 2013, but has only been in Parliament since 2007.

Mark Dreyfus: Appointed as Special Minister of State and Minister for Public Service and Integrity, but retained his portfolios as Attorney-General and Minister for Emergency Management. He is a former barrister, and has also only been a member of Parliament since 2007.

Craig Emerson: Was appointed to the portfolios of Tertiary Education, Skills, Science and Research, but retained his current portfolios as Minister for Trade and Competitiveness, and Minister Assisting the Prime Minister on Asian Century Policy.

Greg Combet: A strong ultra-left Gillard loyalist; named Minister for Climate Change, Industry and Innovation due to the merger of his two departments. The Department of Climate Change is merging with the Industry Department. It is now the Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education. The move cemented Gillard’s — and the left’s — entrenchment of “climate change” into a mainstream Government department.

Tony Burke: Appointed to the Arts portfolio, in addition to his existing position as Minister for Sustainability, Environment, Water, Population and Communities.

Sharon Bird: Takes on the role of Minister for Higher Education and Skills. The Member for Cunningham in NSW since 2004. Born in Wollongong and educated at Sydney University and the University of Wollongong. A TAFE and high-school teacher prior to entering politics.

Andrew Leigh: Appointed Parliamentary Secretary to the Prime Minister. A professor of economics at the Australian National University in Canberra, he has been in Parliament only since 2010.

Gary Gray: Was brought into the Cabinet as Minister for Resources and Energy, Minister for Tourism, and Minister for Small Business. A former executive in the energy industry; ALP national secretary from 1993 to 1999. His former (non-cabinet junior ministerial) roles as Special Minister of State and Minister for Public Service and Integrity would now be taken over by Attorney-General Mark Dreyfus. Also a relatively new member of Parliament.

Don Farrell: Named Minister Assisting for Science and Research, and Minister Assisting on Tourism. He is a Labor Senator for South Australia, and was described as “number six on the top 10 political fixers”, according to The Power Index website.

Catherine King: Joins the outer ministry (ie: non-Cabinet portfolio) as Minister for Regional Services, Local Communities and Territories, and Minister for Road Safety. She has been a member of Parliament since 2001.

Michael Danby: Appointed Parliamentary Secretary assisting Tony Burke (see above). Member of Parliament since 1998. Served as one of two Opposition Whips from 2001 to 2007.

Jan McLucas: Appointed Minister for Human Services. Senator for Queensland since 1998. A former primary school teacher who was active in the Queensland Teachers' Union. On June 6, 2009, it was announced that McLucas had resigned as a parliamentary secretary "to focus on her senatorial responsibilities for Queensland". However, according to the ABC broadcasting network, media speculation suggested a “travel expenses issue”, and the unfavorable publicity generated by it may have been a factor in the decision.

Matt Thistlethwaite: Named Parliamentary Secretary for Pacific Island Affairs and Parliamentary Secretary for Multicultural Affairs. Elected to the Australian Senate representing the state of New South Wales in 2010.

Amanda Rishworth: Appointed Parliamentary Secretary for Sustainability and Urban Water, and Parliamentary Secretary for Disabilities and Carers. Elected to Parliament in 2007.

Shayne Neumann: Appointed Parliamentary Secretary to the Attorney-General, and Parliamentary Secretary for Health and Ageing. Member of Parliament since 2007.

Now out of the Government:

Simon Crean: Perceived within the ALP as an “elder statesman”; he was dismissed by Prime Minister Gillard for disloyalty after sparking the March 21, 2013, leadership challenge, supporting the return of Kevin Rudd as leader, and declaring he would run for deputy position.

Chris Bowen: Former Immigration Minister, resigned all portfolios at a press conference the day after the leadership challenge.

Martin Ferguson: Former head of the Australian Council of Trade Unions (ACTU), but a center-right member of the ALP. He resigned as Minister for Resources, Energy, and Tourism.

Joel Fitzgibbon: Former Chief Whip. Made comments the day before the leadership challenge which were perceived as anti-Gillard.

Kim Carr: Minister for Human Services and previously demoted Rudd supporter. Resigned.

Richard Marles: Forced to resign his Parliamentary Secretary role after strongly supporting Kevin Rudd on the day of the leadership challenge.

Ed Husic: Resigned as Whip after expressing no confidence in Gillard.

Janelle Saffin: Resigned as Whip; consistent supporter of Kevin Rudd.

March 25, 2013

Expected Putsch in Australian Governing Party Fizzles, But Government Falters Nonetheless

Analysis. From GIS/Defense & Foreign Affairs Canberra Station. The Gillard Government in Australia, due to announce a Cabinet re-shuffle today (March 25, 2013), has fallen into what Australian analysts have called disarray and ridicule. With Parliament now in recess, the Government at least avoided a full no-confidence vote, but it has become essentially a paralyzed Government until the next elections. There are now questions as to whether the Government can even last until the scheduled elections in September 2013.

A rebellion within the governing Australian Labor Party (ALP), predicted by this service, failed, scattering any semblance of cohesion within the Government. It was only seven weeks earlier that Ms Gillard had reshuffled her Cabinet.

An attempt to remove Australian Prime Minister Julia Gillard from leadership of the ALP, and therefore from the Premiership, was attempted — and failed — on February 21, 2013. In the end, the attempted putsch, centering around former Prime Minister Kevin Rudd, fell apart when Rudd, sensing that he could not gain the votes within the Parliamentary Labor Party — the ALP members of Federal Parliament — failed to participate in the challenge to Ms Gillard, declaring he would not contest the leadership. This was too late for those parliamentarians, including several ministers, who had already shown their support for Rudd. They were obliged to leave the Government.

The matter was brought to a head by former ALP leader (when it was in opposition) Simon Crean, previously a strong backer of Gillard, who called on Prime Minister Gilllard to call a caucus meeting to decide the leadership issue. Crean, who held the portfolios of regional Australia, regional development, local government and arts, declared that he would not stand for the position of party leader, but urged Rudd to do so and announced that he would be seeking the position of deputy leader. Rudd had inspired the move, but when he began counting the numbers he could muster, he knew he could not win, and so he failed to make the challenge, but not before seeing Crean and others exposed as opponents of the Prime Minister.

Cabinet Ministers Chris Bowen, Kim Carr, and Martin Ferguson also resigned on March 22, 2013, after they had shown their opposition to Ms Gillard. Parliamentary secretary for Foreign Affairs Richard Marles was also forced to relinquish his position.

Ms Gillard had, with a few loyalists, attempted to introduce legislation almost unparalleled in post-World War II Western societies, to control the media, and this move helped polarize her own party. That attempt at creating legislation — essentially to muzzle criticism of her increasing authoritarianism and links to allegedly criminal acts before she became a politician — has failed. In fact, on March 21, 2013, she was forced to withdraw this legislation, and three other pieces of legislation she had proposed.

In the meantime, the opposition Liberal-National Party coalition, has continued to gain ground to the point where Labor faces possibly the worst political defeat in its history.

Foreign Minister Robert Carr, who was appointed to a vacant Senate seat to enable him to be brought into the Gillard Cabinet, has also, like Ms Gillard, become entangled in allegations of malfeasance. Carr was former Premier of the most populous Australian state, New South Wales, and is now being tarred by association with fellow Labor politicians in that state over court hearings over major fiscal improprieties. There was little doubt, even though the current New South Wales legal proceedings against Labor officials focus on the period after the Carr Government, that Carr‘s own Administration was also corrupt and created the climate of criminality which came to pervade the two successive Labor administrations in the state. Nonetheless — or perhaps because of this — he was brought into the Gillard Government as Foreign Minister.

But it was former Labor Prime Minister Kevin Rudd‘s dramatic disloyalty to his own supporters in the childishly inept leadership challenge on February 21, 2013, which will ensure that he never again has high office in Australia, nor, possibly, even the chance at a senior United Nations position which he cherishes. He emerged from the failed putsch as cowardly, disloyal, vain, and incompetent.

The question, then, is what decisions can the Government make in its remaining time in office. And what commitments can it make on behalf of the nation which a future Government would not overturn.

March 19, 2013

A Putsch in Progress in Canberra?

Analysis. From GIS/Defense & Foreign Affairs Canberra Station. Moves are underway within the Australian Labor Party to remove Prime Minister Julia Gillard from the leadership. Ms Gillard on January 31, 2013, gave an unprecedented advance notice of a Federal Par- liamentary election date. She set it at September 14, 2013, presumably giving the long lead time to stave off a power struggle within her own Australian Labor Party (ALP), given the Party’s poor standing in opinion polls. But the long lead-time may only have precipitated the anticipated attempted putsch against her by members of her own party, convinced that she is the main handicap to the re-election of an ALP-led Government. By early March 2013, a number of factions were maneuvering to stage a leadership vote within the Parliamentary Labor Party (the group of elected Labor members of Parliament who can vote for a leader).

Media speculation about the main challenge to Ms Gillard centered, in March 2013, around former Prime Minister Kevin Rudd, a more centrist member of the Party. Rudd himself had been overthrown by Ms Gillard on June 24, 2010. after he had brought Gillard’s ultra-left and left-wing factions into an internal coalition to allow Rudd himself to stage his own putsch against then- Party leader Kim Beazley on December 4, 2006. Rudd, taking over from Beazley as Leader of the Opposition, had gone on to become Prime Minister on November 24, 2007. Thus, when Rudd was overthrown by internal party ballot by the left faction of the ALP in 2010, it enabled Ms Gillard to assume the Prime Ministerial position without having to win election as head of the Party.

But Rudd may not be the most aggressive candidate against Ms Gillard, despite his enmity toward her for her “betrayal” of him. Significantly, when Rudd had announced his challenge against his old mentor and erstwhile friend, Kim Beazley, it was Beazley who warned Rudd against doing “a deal with the devil” — the Party’s ultra-left — to win the party leadership. Rudd ignored his old friend, and drove home the blade of betrayal to Beazley. Now the pattern repeats itself. The ALP left-wing faction is now trying to come up with a compromise candidate of its own to replace Gillard, so that at least it could retain leadership of the Government in the run-up to the election.

One candidate mentioned by ALP insiders as a challenger against Gillard is Defence Minister Stephen Smith. Rudd, far more popular with the media than with the ALP’s parliamentary members, would have to sell his own soul, once again, to get the leadership back, and there are many Labor members willing to consider this because, despite their loathing of Rudd (who treated all his ministers with an equal dose of contempt and vitriol), it would at least give them a chance of Labor winning the September 2013 general election.

But Rudd may also have lost his luster with the public. His platform to win power in 2013 is nothing but vengeance and personal redemption. Many of his opponents — and many in the media — give him equal measure of responsibility with Gillard for the now-delicate state of the Australian economy, where the budget surpluses inherited from the Liberal-National Coalition Government of Prime Minister John Howard have descended into an abyss of debt.

In a last-ditch attempt to control the media in the run-up to the election, Ms Gillard’s Government had attempted to introduce draconian new laws to essentially muzzle free speech in Australia, a significant action for any Western democratic state. Even the ALP’s own lawyers forecast a major constitutional legal debate if the Government attemp- ted, as its proposed legislation indicated, to control media corporation sales, and to “oversee print and electronic media reporting standards”, including internet-based publications.

This may have been a move too far for most Australian voters, who have accepted Gillard’s imposition of massive government spending and significant taxes on big corporations.

On March 13, 2013, a former Labor Planning Minister (in a Western Australian State Government), Alannah MacTiernan, said that Prime Minister Julia Gillard needed to be told that there was no support, even within Labor’s stronghold seats, for her as Prime Minister. Ms MacTiernan said that she was being told even by “rusted on” Labor supporters that they would not vote for Labor in the September [2013] election.

Minister Smith immediately rejected Ms MacTiernan’s assertion, and said that Ms Gillard would lead the ALP into the next election. Sources in the party, however, indicated that Mr Smith was more likely “waiting to be drafted” into a run for the leadership, possibly as supporters of Rudd found difficulty in gaining the numbers to vote out Gillard in the run-up to the election.

The reality — which Defence Minister Smith knows — is that Alannah MacTiernan’s assessment of her party’s condition was valid. The question remained as to whether Labor parliamentarians felt that they could possibly win an election in September, even if they changed leaders at this point, or whether they would be better served to prepare for the loss, and a post-election leadership change.

But Ms Gillard nonetheless has been fighting to build electoral credibility.

There are indications that she has, for example, attempted for some years to suppress adverse news reporting of her allegedly criminal, or criminal-related, financial activities while she was a labor lawyer, before she went into Federal politics. Allegations, with substantial background information, had begun by late 2012 to permeate the Australian mainstream media, and in part this was believed to have led to the coercive new media laws, designed to threaten media proprietors into compliance with her demands for suppression of adverse publicity.

In March 2013, the Government also released statistics which showed a dramatic rise in employment levels in Australia, with official figures showing a decline in unemployment to 5.4 percent. But, at this time, can any Government statistics be believed?

February 8, 2013

Australian Security, Government Situation Declines as Key Cyber Policy Paper Abandoned, Elections Called

Analysis. From GIS/Defense & Foreign Affairs Canberra Station. The Australian Government of Prime Minister Julia Gillard has, in early February 2013, made the decision to withhold the planned — but unannounced — issuance of a key report on the handling of cyber warfare threats to Australian security, a study which was designed to follow the January 2013 release of the Government’s supposed national strategy document, Strong and Secure: a Strategy for Australia’s National Security. [See Defense & Foreign Affairs Special Analysis, February 4, 2013: “Australia’s New Security Reports Intend to Reassure, But Show Little Originality”.] Highly-placed sources within the Department of Prime Minister & Cabinet indicated that the report, which was intended to announce a new cyber security agency or committee to be established late in 2013 (after the 2013 Parliamentary elections), was scrapped because it was “not nearly up to scratch”, and would have caused the Government considerable embarrassment.

It was understood that the Gillard Government, which has attempted to manage the national security series of reports from the Office of Prime Minister & Cabinet (rather than the national security community generally), was stunned by the lack of impact in the media or politically of the release of Strong and Secure: a Strategy for Australia’s National Security. That report, however, did have some reference to the cyber threat being faced by Australia.

Prime Minister Gillard, who is under wide attack politically and (belatedly) in the media over long-standing allegations of personal corruption (quite apart from a series of scandals which have been attached to senior members of her Australian Labor Party), was attempting to shore up the party’s credentials in national security — an area normally the stronghold of the opposition Liberal-National Party coalition — in the run-up to the mandatory elections for the House of Representatives, the lower and governing house of the Australian Parliament, in 2013. Significantly, Ms Gillard gave an unprecedented lead time for the date of the elections: September 14, 2013. Normally, a Prime Minister can, at any time within the Government’s term of office, elect to dissolve Parliament and call elections, giving some degree of flexibility and advantage to the governing party. For Ms Gillard, on January 30, 2013, to have given more than six months’ notice of the dissolution of Parliament (on August 12, 2013), before the September 14 election is almost unprecedented.

There was some suggestion that Ms Gillard took the step to help possibly forestall a coup by members of her own party to replace her with a more “electable” candidate, given the persistent slump which the ALP has had vis-à-vis the Liberal-National coalition in the polls. Ms Gillard, immediately she announced the election, was confronted with the resignation of two of her most senior ministers. Attorney General and Minister for Emergency Management Nicola Roxon, and Minister for Tertiary Education, Skills, Science and Research and Government Leader in the Senate, Chris Evans, resigned from the Gillard Cabinet, three days after the Prime Minister set the date for the parliamentary elections. Both ministers claimed to be resigning for family reasons, and noted that they would not contest the next elections.

Sen. Evans was replaced on February 4, 2013, in his cabinet position by Immigration Minister Chris Bowen, and Ms Roxon was replaced in both her portfolios by Mark Dreyfus, Parliamentary Secretary for Climate Change, and a member of Ms Gillard’s own extreme-left faction of the ALP. Meanwhile, Brendan O’Connor was sworn in as Minister for Immigration and Citizenship, replacing Bowen. Jason Clare, the Home Affairs and Justice Minister, replaced Dreyfus as cabinet secretary.

February 4, 2013

Australia’s New Security Reports Prepared to Help Gillard Government in Election, But No Great Insights into Strategy

Embattled Australian Prime Minister Julia Gillard in January 2013 prepared two new public reports on security in the run-up to a new Defence White Paper, in which it hopes to demonstrate — before the 2013 parliamentary elections — her Government’s commitment to national security, despite massive cuts in defense spending. The first report was a 58-page document [although less than 40 pages of substance], Strong and Secure: a Strategy for Australia’s National Security; the second report was on cyber security. Strong and Secure was released and disappeared without trace in the media after a day or two. The cyber security report was deemed so poorly prepared that it was not released.

Strong and Secure was greeted with little fanfare; it was a highly-politicized agenda which also took a prosaic view — a media-friendly view — of the security climate, with popular buzzwords such as the “Asia Century” and climate change. It followed the 2008 National Security Statement, and the Government’s 2012 Australia in the Asian Century White Paper. The 2013 Strong and Secure document reiterated the popular commitment to the theme that terrorism remained an existential threat, and that the US-Australia alliance — embodied in the ANZUS Alliance, which includes New Zealand — remained the cornerstone of Australian long-term security.

However, the report did hint at the significance of Australia’s commitment to address cyber warfare issues, the topic of what was to have been the next major security report to be issued by the Government. Strong and Secure, issued by the Department of Prime Minister and Cabinet, was billed by the Gillard Government as Australia’s first actual strategy document — the nation-state’s first overarching strategy for national security as a component of grand strategy — and it was clear that it was to be part of an expression of national direction, following the 2012 Asian Century paper.

The document was intended for wide public consumption and was, therefore, vague and lacking in granularity; it was, after all, only 58 pages, including considerable white space, photographs, and graphics meant to reassure the Australian and regional publics. But it did highlight what has, in fact, been a growing reality in Australia for the past two dec- ades: a commitment to whole-of-government approaches to national security, and the implication that this entails more than dependence on the military for long-term security.

The report noted that four terrorist plots had been disrupted and 23 people convicted of terrorism-related charges in Australia since 2011. There had been 438 cyber “incidents” in Australia in 2011-12, requiring a significant response by the Australian Cyber Security Operations Centre. “By the end of 2013, the Government’s most sophisticated cyber security capabilities from across the national security community will be located in (that) one facility.” The study reminded that Australia had 140-million sq. naut. miles of coastal waters to monitor and some 60,000km of coastline.

It added: “National security expenditure has grown from approximately AU $18,600-million in 2001-02 to AU $33,546-million in 2011-12 (excluding aid).” Of this, “Defence dominates our national security expenditure, representing 68 percent or $26-billion of total spending in 2011- 2012.”

The paper noted Australia’s ongoing commitment to the F-35 Joint Strike Fighter project as a core component of its defense thinking. It also noted a $1.5-billion “investment” in intelligence in the 2011-12 fiscal year. But perhaps the paper — more a public relations document than an articulation of a real strategy — showed the Government’s approach to be a series of “strategies” on key topics, from cyber warfare to intelligence, to critical infrastructure resilience, organized crime response, an action plan against a national influenza pandemic, and so on.

Strong and Secure also noted: “The Australian Cyber Security Centre will bring together Defence’s Cyber Security Operations Centre, the Attorney-General’s Computer Emergency Response Team (CERT) Australia, ASIO’s [Australian Security Intelligence Organisation] Cyber Espionage Branch, elements of the AFP’s [Australian Federal Police] High-Tech Crime Operations capability and all-source assessment analysts from the Australian Crime Commission.”

Strong and Secure reinforces the message that Australia has opted for a broader definition of national security, but the document is strong on “government-speak” language and short on innovation. In many respects, it sticks to a conventional, linearist, populist view of where the world is going, rather than highlighting any novel thinking. Strong and Secure gives an indication that, as with the 2009 Defence White Paper, the 2013 Defence White Paper could emerge as essentially a vanilla document offering a “business as usual” approach, wrapped in current jargon.

September 20, 2012

Australian Strategic Policy: Shuffling While Canberra Burns?

Analysis. From Defense & Foreign Affairs Canberra Station. The Australian defense and foreign policy establishment has been undergoing restructuring in what has been seen as a reflection of power shuffling at a political level. Indeed, the saga of the political survival of the Government of Prime Minister Julia Gillard has continued to become more convoluted, even as her fractious ruling coalition — dominated by her Australian Labor Party (ALP) — clings to a one-seat majority.

There is evidence¹ that a challenge could still emerge to Ms Gillard’s leadership, so that the ALP can face the next general election with a more electable leader. However, Ms Gillard’s popularity began, in September 2012, to climb again, despite the growing allegations of criminal misconduct in her pre-governmental career as a union lawyer. The Prime Minister has gone to extraordinary lengths to suppress reporting on these issues, including taking steps to attempt to limit the freedom of the press. Despite this, or perhaps because of it, polling still shows that she leads her opponent, leader of the Opposition — and head of the Liberal Party — Tony Abbot in voter popularity. Not so her ALP as a whole, which trails the Liberal-National Party coalition opposition in the polls.

See “Australia Poised for New Leadership Challenges” in Defense & Foreign Affairs Strategic Policy, 8/2012; published in Defense & Foreign Affairs Special Analysis, September 6, 2012.

There is also evidence that the malaise in governance, and the ongoing economic and personal scandals of elected politicians, have added to morale problems as well as management questions in the Department of Defence and the Armed Forces. There was clearly a high level of unhappiness between the Minister for Defence, Stephen Smith, and the (civil service) Secretary of the Department of Defence, retired Maj.-Gen. Duncan Lewis, who was suddenly moved to a diplomatic post. Duncan Lewis had a distinguished military career, including heading all special forces, before becoming National Security Advisor to then-Prime Minister Kevin Rudd, a post he continued under Prime Minister Gillard until taking up the Defence post, where he was seen as a highly-knowledgeable manager of the defense system, but someone who moved very much by consensus. He apparently clashed with Gillard’s Defence Minister, Stephen Smith, who had been tipped as a possible opponent to the Prime Minister. Smith has been less than popular with the Armed Forces. He — and the Government — wanted a departmental head who would wield the axe without discussion or question.

Smith had informed Lewis that the Government planned more substantial cuts in Defence, including reducing the number of contract (corporate-supplied) civilian employees by some 4,000 and the number of Defence civil servants by a reported 7,000, along with further cuts in direct defense spending. Lewis reportedly told the Minister words to the effect of “over my dead body”. That was all Minister Smith and the Prime Minister needed to hear.

From that point forward the Government’s planning went into effect, with the objective of sending Maj.-Gen. (rtd.) Lewis to Brussels where he would handle NATO issues, among other things. But the real problem was where to put the present ambassador, Brendon Nelson, who had few qualifications for other key governmental posts (and he was, in any event, not from the present Government’s political persuasion). Nelson was considered for two other positions (that is, positions which were prestigious but which would not be directly in policy areas) under Australia’s control in the United Kingdom.

On Monday, September 17, 2012, Prime Minister Gillard was ready to make her announcement about a number of significant moves within the Public Service:

“Secretary of the Department of Defence, Mr Duncan Lewis AO, DSC, CSC, has been appointed as Ambassador to Belgium, the EU, Luxembourg, and NATO. This position had previously been held by the Hon. Dr Brendan Nelson [a former Defence Minister under the previous Liberal-National Party Government and a former head of the Liberal Party], who will take up the position of Director of the Australian War Memorial on December 17, 2012. Mr Lewis will leave the Department of Defence on October 10, 2012, to prepare to take up his new appointment.”

“The current Secretary of the Department of Foreign Affairs and Trade, Mr Dennis Richardson AO, will be appointed as Secretary of the Department of Defence with effect from October 18, 2012. Mr Richardson was Australia’s Ambassador to the United States between 2005 and 2009 and was Director-General of ASIO [the Australian Security Intelligence Organisation] between 1996 and 2005. He has been the Secretary of the Department of Foreign Affairs and Trade since December 2009.”

“Mr Peter Varghese AO will be appointed as Secretary of the Department of Foreign Affairs and Trade. Mr Varghese is currently Australia’s High Commissioner [Ambassador] to India. Mr Varghese was previously Director- General of the Office of National Assessments [ONA, Australia’s intelligence coordination body]. He has also served as Australia’s High Commissioner to Malaysia and as a Deputy Secretary in the Department of Foreign Affairs and Trade. He will take up his appointment as Secretary on December 3, 2012.”

“Both Mr Richardson and Mr Varghese’s appointments are for five year terms.”

Significantly, all of this may be akin to re-arranging the deck-chairs on the Titanic, after it hit the iceberg. Australia’s boom economy seems set for a major crash, as mineral exports to the People’s Republic of China (PRC) take a noticeable downturn — indeed, as the PRC’s economy also suffers a slowdown — at a time when the Australian economy has little in the way of reserves. The governmental budget surpluses, built to record levels under the former Liberal- National Party coalition Government of Prime Minister John Howard, have been spent, and deficits and debt have been piling up rapidly.

The end of the resources boom has some exceptions, which would likely ameliorate the chances of a major economic downturn for Australia: exploration for, and exploitation of, offshore natural gas reserves has to some degree compensated for the declining demand and investment in the hard ore sectors, but most of these new reserves and investment also fall into the Indian Ocean sector off the state of Western Australia. This fails to help balance the political-economic equation in the country: the state of Western Australia has less than 10 percent of the national population, but contributes a disproportionately high amount of the national wealth (from agriculture as well as resources).

This has led to significant dissatisfaction in Western Australia over the fact that the state subsidizes the key population areas in the South-East of Australia, in the Sydney and Melbourne areas. Indeed, a consistent slide in manufacturing output has meant that the great urban areas of Australia (the most urbanized major country in the world) have gradually become “pseudo-post- industrial” in that they have become service industry oriented.

The Gillard Government on July 1, 2012, introduced a punitive “carbon offset tax” which contributed to a series of private sector decisions to hold off on major investments in the minerals industry. This was seen as likely to hit the competitiveness of Australian exports at a time when global demand was weakening.

All of this impacts plans by Australia to sustain its major defense capital expenditure programs. The Gillard Government had cut defense spending to its lowest levels since World War II — now at 1.5 percent of GDP — and more cuts were expected as Treasure Wayne Swan, himself a contender to replace Prime Minister Gillard, works to produce a surplus in the next Federal budget. This has already been raised by Dennis Richardson, currently the secretary of the Department of Foreign Affairs and Trade who replaces Duncan Lewis at Defence on October 18, 2012.

Mr Richardson in October 2011 in a speech about Asia, noted: “[T]he changes in East Asia, both economic and strategic, will see a real growth in regional defense expenditure. … This will not be directed against us, but it will mean that the capability gap we have traditionally enjoyed in the wider region will significantly diminish and, in some instances, probably disappear.”

“This in turn will raise questions — not now but well down the track — whether we will be able to continue to meet our defense needs with just under two percent of GDP. None of this should be seen in dramatic terms, or in terms of growing threats. Rather, it is a natural consequence of countries getting richer and modernizing their defense capabilities ... We will not be able to ignore that reality.”

The previous Howard Government had ensured defense spending at two percent of GDP, and protected it from budget cuts, but since October 2011, the Gillard Government had cut spending further to 1.5 percent of GDP. The cuts represent some $5.5- billion over the coming four years, while the Labor Government insisted it would retain core military capabilities. Indeed, it has continued to expand capital outlays, which implies that operational expenditures, training, and routine missions and manpower would have to suffer.

Outgoing departmental Secretary Duncan Lewis was known to have fought this situation. He was quoted in a speech in August 2011 as saying: “Our aspirations must match our projected budget and resource allocations … Strategy is sometimes taught as a holy writ as if it can’t be allowed to be sullied by money or reality. This is a mindset we must change.”

The Australian, in a column written by Mark Thomson, a defense analyst at the Australian Strategic Policy Institute (ASPI) on September 18, 2012, noted: “The departure of Duncan Lewis as secretary of the Department of Defence adds to the sense of despair, if not crisis, that has engulfed the Australian defense establishment in recent times. Following the savage cuts to defense spending in the May [2012] budget, our defense planners have been caught in an impossible situation.”

“On the one hand, the Government has raided the defense budget in its scramble to deliver a surplus before the next election. On the other, the Government is saying that it's committed to delivering the core capabilities promised in the 2009 Defence White Paper.”

“It’s loaves and fishes time up on Russell Hill. So how much defense does Australia need anyway? Following the savage cuts to defense spending in the May budget, many fear that our defenses are being weakened excessively in the face of emerging risks, in particular from China. Given recent Chinese assertiveness in the South China Sea, it’s easy to understand their concerns.”

The Australian defense problems are compounded by the fact that the country spends some $1.3-billion a year in operational costs supporting the US in the war in Afghanistan. There is little doubt, however, that the budget concerns over defense have been compounded by management issues relating to some of the big capital programs, such as the proposed acquisition of the F-35 Joint Strike Fighter, and the replacement for the Collins-class submarines. Moreover, there is speculation that the proposed new Defence White Paper — now being formulated — was envisaged by the Gillard Labor Government as a means of overturning the premise of the former Rudd Labor Government that Australia’s core defense capabilities should be retained, a posture which implied maintaining a higher defense budget.

Certainly, the Gillard Government resisted inputs and full authorship of the expert independent advisor panel it appointed — consisting of Alan Hawke (former Defence Secretary), Rick Smith (former Defence Secretary), and Paul Rizzo (a private sector financial advisor) — to make the new White Paper process look unbiased and apolitical.

In Canberra now, it is all about politics, retention of political power (or the seizure of it), and avoiding the legal and moral scandals which have beset the Government. Strategy, as outgoing Defence Dept. Secretary Lewis lamented, has gone. The US Government, itself slashing defense spending, has complained about the decline in Australia’s defense spending, but this complaining by the US — given Australia’s massive human and financial outlays to support the US in Iraq and Afghanistan — is just stoking resentment in some areas in Australia against Washington.

Calls are increasing for a more independent strategic policy in Australia, in which Canberra could shape regional security arrangements to better suit its own interests, and in which the US would be the main ally, but not the sole consideration.

September 6, 2012

Australian Analyst Cites Declining Economic Situation in Australia

Australian newspaper columnist and commentator Piers Akerman outlined major challenges facing the Australian economy in an article in The Telegraph newspaper in Sydney on September 6, 2012. The article is reprinted in full below:

By Piers Akerman

Thursday, September 06, 2012 (posted 5:54pm Australian EST)

WHEN the scandal-ridden [Gough] Whitlam Labor government [1972-75] hit the fiscal bricks in the mid-seventies it turned to Pakistani Tirath Khemlani to act as a conduit for a $4-billion petrodollar loan.

It was a disastrous experiment and became a major factor in Gough Whitlam’s dismissal as prime minister.

The Whitlam government attempted to avoid the usual fund-raising process of the Loans Council and illegally borrow from Middle Eastern sources bypassing Treasury.

The lies generated by the attempt and subsequent concocted cover-up cost Treasurer Jim Cairns and Minerals and Energy Minister Rex Connor their jobs.

Deputy Prime Minister Cairns, who was messily entangled with his private secretary, Junie Morosi, was sacked. Connor resigned in disgrace.

The Loans Affair contributed to a huge loss of confidence in Whitlam’s crippled government and was one of the principle reasons why the opposition blocked supply, assisting Governor-General Sir John Kerr in his decision to dump Gough as Prime Minister and consign his government to Labor’s hagiographers.

In essence, the Loans Affair was an extraordinary example of government arrogance and lack of transparency - a model for government maladministration and worst practice.

The Gillard government has avoided the pitfalls of seeking loans from shady Pakistanis by the simple act of lifting the government’s debt ceiling without debate, and with an appalling lack of transparency, as the need arises.

Over the past four years, the Labor government has lifted the debt ceiling four times, from $75-billion, to $200-billion, to $250-billion and now $300-billion. On each occasion Treasurer Wayne Swan has earnestly promised not to exceed the total debt limit.

But over the same period Labor has also produced the four biggest Budget deficits on record, totaling $174-billion.

Swan told the ABC’s AM program in May that lifting the debt ceiling was “no big deal” but Labor’s deficit this financial year has grown from the $22.6-billion projected in last year’s budget to $44.4-billion now — a doubling in just 12 months.

Once $200-billion was sufficient, then it was $250-billion, now it is $300-billion — but the catch is that the Gillard Labor-Green-independent minority government is spending around $100-billion a year more than in the last Howard-Costello budget.

In just the last 12 months, Labor’s net debt projection for this current financial year has blown out from $106.6-billion to $142.5-billion, a deterioration of one third.

et debt continues to rise next year and the year after to a new peak of $145-billion, the highest on record. This continues the record of Labor governments that have increased net debt every year since 1990. With every increase in debt as Labor raises the Commonwealth debt limit, so too does the cost of servicing the new debt level rise.

Net debt interest will rise to $8.2-billion a year and each day we will be paying $22-million in interest alone on Labor’s debt.

While only the most rusted-on Labor luvvies in the Canberra press claque could bring themselves to believe Swan’s forecast of a micro-surplus for 2012-13, which he promised in last May’s Budget, it is still worth noting that if it were to be believed, it would still take 113 years to pay off the $174-billion of cumulative deficits Labor has delivered in just four years.

But of course, Labor’s forecast surplus in 2012-13 is not real.

It’s a pea-and-thimble surplus obtained by artificially shuffling spending by a few weeks out of 2012-13 into this financial year, and by treating spending on the NBN as “off budget”.

Had just the spending on the $50-billion NBN been treated as “on budget” then the $1.5-billion surplus forecast for next year would be a $4.3-billion deficit.

Add in the $8-billion of money that has been moved forward or pushed back out of 2012-13 and the deficit would be over $12-billion.

Gillard, Swan and a highly paid army of government consultants and spin doctors are spending hundreds of millions in a desperate attempt to make the public believe they have run a good government.

If the story of financial vandalism is not sufficient evidence to the contrary, there is also the global competitiveness index score card released this week by the World Economic Forum.

This group, which ranks 144 nations, found Australia slipped down the ladder in a number of crucial areas in the four years from 2007-08 to 2012-2013.

In terms of wastefulness of government spending, we went from 10th place to 48, in terms of the burden of government regulation, we dropped from 68 to 96. Transparency: from 12 to 29; government effectiveness: 5 to 18; government debt: 16 to 30; flexibility of wage determination: 87 to 125; labor market efficiency: 13 to 42; hiring and firing practices: 63 to 120; pay and productivity: 40 to 80.

This is the scorecard of a nation that is going backward, a nation in decline, not a nation that is harnessing its mineral wealth and implementing reforms.

This is a government that cannot live within a budget. It is expected to reach the $250-billion debt ceiling in four years, with current forecasts showing it will just squeeze under that target with $300 million to spare in barely four years.

Gillard and Swan, and the majority of the other ministers, are conning the Australians people.

Their legacy will be a lasting debt and a raft of ineffectual policies that will bleed the nation for generations.

September 6, 2012

Australia Poised for New Leadership Challenges

Analysis. From GIS/Defense & Foreign Affairs Canberra Station. Prime minister Julia Gillard of Australia is preparing for challenges to her tenuous grasp of the leadership of the Australian Labor Party (ALP), and therefore the leadership of the governing, ALP-led coalition Federal Government, as she faces mounting scandals, both over the conduct of the economy and over her own involvement in one of the many corruption allegations facing Government members.

Significantly, while the Australian media is focused on a possible challenge by former ALP leader and one-time Prime Minister Kevin Rudd — who Ms Gillard overthrew and removed from office in June 2010 with the help of her left-wing faction of the ALP — there now seems a strong possibility that she may be challenged, and replaced as Party leader (and therefore as Prime Minister) by a member of her own ultra-left faction of the ALP.

There are now allegations, gaining increasing publicity in Australia, that — at a minimum — a prima facie case exists that Ms Gillard was aware of, and concealed, criminal fraud by her then-boyfriend, a key union official, an offence which would carry a two-year prison term.

Defense & Foreign Affairs has learned that Minister of Climate Change & Energy Efficiency Gregory Ivan Combet, a major supporter of the Prime Minister within her left-wing faction of the ALP, is being prepared to challenge Ms Gillard for the leadership, in a move which would probably be supported by her. This would enable Ms Gillard to exit the leadership gracefully, given that there seems little likelihood that she would win the next general election, when-ever that is held. Moreover, it would ensure that a Combet-led Government could both provide legal protection for Ms Gillard as she faces the near-certainty of exposure to prosecution for fraud in connection with union-related activities before she entered Parliament, and also allow the ALP to put a new face on the Administration so that it could better prepare for the next election.

By the end of August 2012, it was seen as a race between the so-called centerist challenge, led by Rudd, and a “friendly” take- over of the Government from the left, either by Federal Treasurer Wayne Swan — who has been heavily involved in the economic collapse which the country is now facing — or Greg Combet. Indeed, the possibility of a Swan challenge for the leadership is increasingly being seen as a cover for the campaign now being prepared by, and with, Combet.

For Labor, the political situation seems set to get worse as the Australian economy begins to see the impact of both a decline in exports to the People’s Republic of China (PRC) — Australia’s key client — and the continuing slump in private sector employment caused by the imposition of a carbon tax. A number of economists are forecasting a major collapse in employment levels and housing values over the coming year, leading up to the point when the Government must call the next election (by November 30, 2013, unless the Government, with its single-seat majority, collapses earlier, or unless the Prime Minister calls an earlier election).

Within this climate of domestic political instability, however, the Australian Government continues to strengthen its strategic alliance relationship with the United States, partly because of traditional closeness between the two states; partly because of the ideological closeness of Prime Minister Gillard and like-thinking US Pres. Barack Obama; and partly because of the new US “Pacific tilt” strategy which sees Washington abandoning its Atlantic-oriented strategic primacy in favor of bolstering its Pacific challenge to the PRC.

One significant move was the largely-unnoticed appointment — announced on August 20, 2012 — of Australian Army Maj.- Gen. Richard (“Rick”) Burr, who had been commanding the First Division, Australian Regular Army, to become Deputy Commander, United States Army Pacific (USARPAC). Maj.-Gen. Burr — a former Australian Special Air Services Regt. commanding officer — would, apart from serving as the Main Command Post Deputy Commanding General for contingency operations, would also supervise training and USARPAC liaison with countries in South- East Asia and Australasia. Significantly, Burr has already been highly decorated (Distinguished Service Cross, Member of the Order of Australia, and Member of the Royal Victorian Order), and has seen active service in Afghanistan and Iraq; he also has the US Bronze Star). A number of other key Australian officers are also now seconded into line positions within US defense commands, showing a growing closeness between Washington and Canberra, despite some differences in strategic objectives in the Indian Ocean and Pacific Ocean theaters (although with more closeness than differences).

Meanwhile, the embattled Gillard Government is continuing to prepare a new Defence White Paper, but there have been conflicts emerging between the Government and the independent advisory panel, consisting of Alan Hawke (former Defence Secretary), Rick Smith (former Defence Secretary), and Paul Rizzo (a private sector financial expert). Sources in Canberra indicate that the new White Paper now ran the risk of being merely a political document to justify recent Government actions on Defence, particularly in the area of defense procurement mis-management, and suggested that it would not be a document which would reflect the changing strategic realities facing Australia in light of new economic and geopolitical conditions.

May 10, 2012

Australia Moves into Uncertainty as Gillard Government Becomes More Fragile; Defense Spending Reduced

Analysis. From GIS/Defense & Foreign Affairs Canberra Office. Prime Minister Julia Gillard’s Labor Party (ALP)-dominated coalition Government of Australia has clung to power without an express public mandate since the August 21, 2010, House of Representatives elections. This has been largely because its parliamentary majority has been guaranteed by four independent parliamentarians and one member of the Greens party, all of whom recognize that they would be unlikely ever again to gain a position of power and vote with the ALP to preserve their privilege for as long as possible.

Thus, Ms Gillard has been able to avoid being voted from office. Even her colleagues privately agree that when (not if) she falls, the Australian Labor Party has been so damaged by its extreme ideological politics that it was felt unlikely that the party would see office again for another decade.

Ms Gillard has, however, sought to achieve two things: firstly, a new budget designed to give her a fighting chance at the next elections (scheduled for 2013 unless the Government collapses earlier); and secondly, to make some changes “on the ground” which would reinforce government control over the economy and political expression, by being able to, essentially, eliminate freedom of speech. The new budget has been called a juggling act, and, even though it promises to deliver a surplus, Australian economists have pointed out that it is unlikely to do so, and relies heavily, as well, on earnings from a new carbon tax and a super-tax on mining companies to deliver revenues.

There has been little attempt to rein in government spending; on the contrary, the rôle of the State continues to expand. But in the short-term, there would be cuts in defense spending, and this may well hit at the progress of Australian plans to acquire the US-UK F-35 Lightning II fighter for the Royal Australian Air Force (RAAF). Certainly, the rosy days of considering a buy of 12 new submarines are fading from memory, even if the Royal Australian Navy (RAN) could find sufficient manpower for the fleet.

Defence spending has been cut, under the new budget, to below 1.6 percent of GDP, a depressed level not seen since the 1930s. Only the significant level of growth in Australian mineral exports — which Ms Gillard has attempted to harness with additional taxes, despite the prospect of a decline in the near term in the PRC’s import requirements from Australia — has kept some of the major defense programs, such as the F-35, in contention. Dr Mark Thomson, from the Australian Strategic Policy Institute, claimed that, under the ALP, defense spending for 2013-14 would be at 1.5 percent of GDP and in 2015-16 would be 1.6 percent of GDP. The UK for example, spends 2.57 percent of GDP on defense. But the outyear projections on defense spending even assume that the economy — and therefore the Government’s ability to raise funds — would grow at the levels projected. This is highly unlikely, given present trends. The Government has now called for a new Defence White Paper to look at the question of Australian security, but all such Australian White Papers since the 1986 Defence White Paper — the last truly strategic appreciation of Australia’s strategic position and goals — have been highly politicized and their real substance cut and shaped to ensure that the white papers merely reflected a bland and unstartling view of the global threat.

“The Government takes great pains to solicit the best advice from the broader strategic community in Australia, and then manages to pigeonhole and ignore it,” one analyst — who was asked to provide testimony for the new White Paper — noted.

Meanwhile, the new budget was not well received, neither by the mainstream Australian electorate, nor by economists. Even though the Government portrayed the budget as one which slashes spending, this is not really the case. Former Australian Treasury official Des More noted: “Unsurprisingly, the level of spending is projected to increase again in 2013-14 to 23.7 percent of GDP. Note that the rate of growth in real spending since 2007-08 is over three percent per annum, above the Government’s promise to keep it, on average, at two percent per annum.” Analyst Terry McCrann, writing in the Herald-Sun newspaper on May 8, 2012, noted that Treasurer Wayne Swan’s plan was “an unbelievable budget. Literally.” He noted that the budget included new spending of A$22-billion (approximately the same in US$) over the coming five years, including the current fiscal year. Overall, he said, “Spending goes up $25-billion this current year; falls $7-billion next year; and then leaps by $23-billion.”

Meanwhile, the Gillard Government has been moving ahead with plans to introduce controls on what could and could not be said in the media. By “media”, it meant all forms of public dissemination of information, including internet, blogging, and twittering, as well as the conventional print and electronic media. The Gillard Government has phrased its approaches to creating restraints — and a monitoring watchdog — under the guise of ensuring “fairness”, but the reality is intended to be one of the most sweeping reversals on freedom of expression seen in a Western society since World War II’s security censorship laws.

It is usually assumed that, with the fall of the Gillard Government, an incoming coalition of the Liberal and National parties would reverse the carbon taxes, the mining super-tax, and the curtailment of free expression, but that cannot be guaranteed. What is likely to occur, given Australian political history — which is not dissimilar to that of other Western states — is that an incoming government would be reluctant to abandon the additional revenue sources created by an earlier government, even though the taxes were challenged ideologically when the new Administration had been in opposition. Equally, the attempts to curtail free speech would likely also be seen as favoring the government of the day, regardless of party, and could well be retained.

In the meantime, the Gillard Government has made no moves to position Australia as a high-growth, major economic player in the global community. The Prime Minister — and Australian officials generally — have disdained comparison with the so-called “BRICS” states (Brazil, Russia, India, China, and South Africa), even though Australia, on a per capita basis (with 23-million population) is more than competitive with the BRICS. Australia’s 2010 GDP was $924.843-billion. Brazil’s 2010 GDP stood at $2.087-trillion, with some 185-million population; Russia’s at $1.47- trillion, with 143.4-million people; India’s at $1.727-trillion, with some 1.2-billion people; the PRC’s at $5.92-trillion, with some 1.3-billion people; and South Africa at $363.7-billion, with some 49-million population.

Despite the fact that the Gillard Government entered office with a major budget surplus and in an ideal global position — despite worldwide recessionary trends — it has used the period in office to substantially increase non-productive entitlement spending (essentially vote-buying), and an enlargement of the unproductive State sector of the economy, while actively “de-stimulating” the investment position of the Australian economy. The Australian and Indian GDPs were only narrowly different a decade ago, but, by 2012, and despite a dysfunctional and corruption- prone Indian governance framework, India — like some of the other BRICS — was looking at economic growth rates dramatically higher than Australia’s.

February 23, 2012

Australian Foreign Minister — and Former Prime Minister — Kevin Rudd Uses Washington, DC, as Platform to Challenge Prime Minister Gillard

Analysis. From GIS/Defense & Foreign Affairs in Canberra and Washington, DC. Australian Foreign Minister and former Prime Minister Kevin Rudd on the night of February 21, 2012, used a press conference in Washington, DC, to announce his resignation from the Government of Prime Minister Julia Gillard, over what Rudd called the Prime Minister’s lack of support for his mission. The move signals the long-awaited challenge by Mr Rudd for the leadership of the Australian Labor Party (ALP) and the premiership, because Mr Rudd — as he has oft-expressed — felt that he was the only viable leader to take the ALP successfully into the next Federal elections, at a time when the ALP-led coalition Government is deeply out of favor with voters and the opposition Liberal-National Party coalition is overwhelmingly favored.

Mr Rudd had originally blackmailed Ms Gillard for the post of Foreign Minister when Julia Gillard led the ALP to win the most seats, but not a majority, at the last House of Representatives election on August 21, 2010. Ms Gillard was able to cobble together a coalition with the Greens and five independent members of parliament to win a one-seat majority — and therefore government — in Parliament, but Mr Rudd was, with a decisive vote, able to hold out for the post of Foreign Minister. He made it clear that he would resign from Parliament to ensure that Ms Gillard lost government if he did not get at least that sop. Ms Gillard had, on June 24, 2010, led a coup within the parliamentary caucus of the ALP to remove Kevin Rudd as Prime Minister, after Rudd had led the ALP to win power, on November 25, 2007, after Prime Minister John Howard (Liberal) had retired.

Mr Rudd, who had earlier staged his own palace coup to remove the then-leader of the ALP (and then Opposition Leader), Kim Beazley, his ostensible long-time friend, on December 4, 2006, proved deeply unpopular with his Labor parliamentarians, many of whom had supported his initial putsch against Beazley. He had, as he delivered the coup de grace to Beazley, promised the former leader (and former Defence Minister, Deputy Prime Minister, etc.) the post of Ambassador to Washington, knowing Beazley’s close relations with the US. Ironically, Rudd was in Washington, DC, ostensibly as the guest of Amb. Beazley when he (Rudd) made his “surprise” speech, announcing his resignation. Certainly, it was not known in Washington that he would make this gesture while on a taxpayer-funded official visit to Australia’s major ally. Indeed, although Mr Rudd clearly felt that it would enhance his platform for the statement — and separate him from the Prime Minister — there were sources in the US Government who felt embarrassed by Mr Rudd’s move.

One Canberra senior political source, a former colleague of Mr Rudd, noted: “It is no secret that Rudd has been maneuvering for some time, preparing to replace Julia Gillard before the next elections. Everyone, including Julia, knew he would do it. However, to do it on the taxpayers’ tab shows just how insensitive he is. But that, too, is nothing new. It’s all about Kevin.”

Significantly, Mr Rudd has, through friends, been attempting to reassure those MPs who had first supported him, and had then been alienated during his Premiership, that this time he would be kinder and more loyal to them. However, it is by no means sure that he yet has the numbers to replace his even more-left-wing opponent, Prime Minister Gillard, in a new leadership contest, despite the unprecedented lack of support within the ALP and the electorate for Miss Gillard. No Australian prime minister has consistently polled so low in electorate polling. It would only be for this reason that some ALP parliamentarians, fearful that she would lead the ALP to certain defeat in the next elections, have considered giving their support to another man they do not trust, Kevin Rudd, because he looks more electable than Miss Gillard, facing a popular Liberal-National coalition led by Tony Abbott, who polls — as leader — less strongly than his party and the opposition coalition.

By late February 2012, the loose and dysfunctional ALP-led coalition Government was looking shaky, and it would only take one of the independents or Greens to remove support for the Government for the Gillard Administration to collapse, forcing new elections within six weeks of that event. It was extremely possible that Ms Gillard, knowing that she would be unlikely to lead Labor to victory in any new election in the coming months, might precipitate such an event herself, merely to ensure that Mr Rudd does not oust her from the leadership, even if he was able to lead the ALP to electoral victory. Even that event — assuming Mr Rudd had time to mount a successful leadership challenge — is not assured; he could still fail to win the next general election.

Said one Canberra ALP insider: “There’s not just blood on the floor; this is the Augean Stables. There’s a lot more than blood, and it’s all over everything, and the humiliation rubs off on the entire party.”

February 11, 2011

Australia’s New Defense Budget Concerns Arise as Natural Disaster Costs, Program Delays Pressure Government

Analysis. From GIS/Defense & Foreign Affairs Canberra. Major natural disasters in Australia could, according to sources in Canberra, wipe more than a half-percent off the nation’s gross domestic product (GDP). It may well be more than that, and the recovery period for the major mineral (particularly coal) and agricultural exports may be protracted. All of this seems set to have a strong impact on the valuation of the Australian dollar, which had been rising in relative value against the US dollar (itself in protracted decline). The result is likely to be a significant impact on defense spending, the creation of new taxes, and the prospect that the present Government of Prime Minister Julia Gillard could fall within 2011.

Disaster relief funding for flooding and cyclone damage in the state of Queensland, and floods in New South Wales and Victoria, as well as major bushfire damage in Western Australia, have all placed a major strain on the Labor Party-led coalition Government of Australia. The natural disasters — coupled with the thinly-stretched Australian Defence Force (ADF) commitments in Afghanistan and around the world — seems likely to, at the very least, threaten the Defence budget and the numbers and scope of planned defense equipment purchases from abroad.

Of particular significance is the prospect of the reduction in the planned numbers of Lockheed Martin/BAE F-35 Lightning II Joint Strike Fighter aircraft for the Royal Australian Air Force (RAAF), or the prospect that the Royal Australian Navy (RAN) will be unable to pursue all of the ship programs to which it has committed, or that the Army may find itself forced to delay or scale back its Land 121 program for new military vehicles.

Already, Defence Minister Stephen Smith and Minister for Defence Materiel Jason Clare on February 1, 2011, announced the scrapping of two of the RAN’s three heavy landing ships and the six landing craft built especially to support them. This was announced just hours after Cyclone Yasi, when it looked, and still looks, as if these vessels were just the kind of support which would be useful for infrastructure recovery along the North Queensland coast. The ADF — despite enormous pressures on its manpower — was pivotal in addressing disaster relief as a result of the Queensland floods even before Cyclone Yasi struck the Queensland coast.

The two vessels involved, HMA Ships Kanimbla and Manoora, were a quick, cheap purchase from the US Navy (they were USN Newport-class LSTs: landing ship-tank) during the 1980s. The vessels were acquired on the basis of representations from the USN of the vessels’ good condition, with little inspection. The RAN commodore who did the job had little or no experience in the business of either structural integrity or how the ships could deliver their cargoes — assault forces — ashore in landing craft. So now the hulls are at the end of their economic service life, their gearboxes gone and not worth the investment to repair. To top it all, the six supporting landing craft built especially to provide over-the-beach capability from the vessels were a design failure which ensured that they would be unable to be lifted back aboard. As one Canberra official noted ironically: “Not a bad return for the expenditure [on the landing craft] of some $40-million. Mind you, one of the specs was an ability to take tanks ashore, not bring them back aboard!”

Minister Smith noted on February 1, 2011: “HMAS Manoora and the Royal Australian Navy’s other amphibious support ships (HMAS Kanimbla and HMAS Tobruk) will be replaced by two Canberra-class LHDs, the largest Ships ever operated by the Royal Australian Navy.”

He went on: “Later this month [February 18, 2011] the hull of the first LHD will be launched in Spain where it has been constructed by Navantia. The hull will arrive in Melbourne next year [2012] for further work to be completed at the Williamstown Shipyard before the LHD becomes operational in 2014. Australia’s second LHD will become operational the following year. The LHDs are bigger than Australia’s last aircraft carrier [HMAS Melbourne, an ex-RN Majestic-class carrier]. Each is 230 meters long and can carry a combined armed battlegroup of more than 1,000 personnel, 100 armoured vehicles and 12 helicopters. Each also includes a 40-bed hospital.”

In the immediate term, Australia now goes into the Cyclone Season with “the poor old [HMAS] Tobruk” currently being rushed through emergency dry dock in case of need. Australia has now only a limited ability to conduct realistic operations in the South Pacific.

Meanwhile, to bridge the amphibious capabilities gap — given that regional maritime capability is arguably Australia’s most important regional projection function to support military operations and disaster relief in the Pacific and Indian Oceans — the Government was now considering leasing the one UK Bay-class LSD (landing ship-dock) (the Royal Fleet Auxiliary had been operating four of the class), made redundant by the 2010 UK Strategic and Defence Review.

Meanwhile, the Australian National Audit Office’s (ANAO’s) analysis of the Defence Materiel Organisation’s (DMO’s) status briefs on 22 of its 30 top new military capability acquisition initiatives in 2009/10 showed that almost half (13) had experienced schedule slippage totaling some 688 months, and representing a 31 percent increase on the original planning schedule for achieving final operational capability.

Typically, projects identified with major slippages are those which have been regularly investigated over recent years by the ANAO, reported by the media, and/or listed on the Defence Materiel Minister’s “projects of concern” list.

They are:

·         JP 2043/3A: HF (High-Frequency Radio) Modernization (120 months);

·         Sea 1439/3: Collins-class submarine Reliability and Sustainability (99 months);

·         Sea 1390/2.1: FFG Upgrade (84 months);

·         Sea 1439/4A: Collins-class Replacement Combat System (72 months);

·         Sea 1448/2A: Anzac-class frigate Anti-Ship Missile Defense 2A (64 months) and its related phase, 2B (49 months).

Minister Smith has now added project Air 5418/1 — the acquisition of the US Air Force-operated Joint Air to Surface Stand-off Missile (JASSM) — to his recently issued list of 11 new military capability acquisition “projects of concern”. He made a point of the JASSM’s troubles during a frank recent speech to the Defence Senior Leadership Group, noting that many of the 550 Defence submissions which crossed his desk over the preceding 10 weeks were not up to the standard which he had experienced in his previous portfolio (as Minister for Foreign Affairs). Minister Smith chided the group, noting that each submission “has to be treated as deserving of full and proper consideration ... (they) must provide Ministers with all the information and all the analysis needed to make sensible and informed decisions in the national interest.”

He made a call for more “quality and timely” advice, reminiscent of the demand by former Defence Minister Robert Hill’s similar pleas during his early days as Minister. Smith was even more frank about Air 5418/1, as it was on the list “not primarily because of industry delays or cost increases. It is because of our (the Department’s) poor management, our failure to keep Government properly and fully informed about the Project and its difficulties”. He subsequently advised that he had asked the Department to “review the effectiveness of its management of major projects, and Defence will use the JASSM project as a case study for improvements in this area”.

Significantly, the Army programs seem to suffer less embarrassment than those of the other services. Delays in the RAAF’s Boeing Project Wedgetail $4-billion airborne early warning (AEW) aircraft program (for six aircraft, based on the Boeing 737-700IGW twin-jet airframe) were, arguably, more down to contractor issues (resulting in major penalty payments by Boeing to Australia). All aircraft have now been delivered to the RAAF, but remain some way from being ready for operational acceptance and deployment.

What seems clear is that the inefficiencies and delays in the procurement system at Defence were more tolerable when budget concerns were not so pressing. The current climate of impending economic downturn, however, seems likely to put not only Australian defense procurement, but Australian commitments to external military deployment, under greater scrutiny.

The Gillard Government has undertaken steps to introduce a range of new taxes, some based on paying for the disaster relief needs (on the basis that the cash surplus the Labor Government inherited has already been spent), and on carbon taxation (even when the US Obama Administration has backed away from such an approach), but these seem set only to further inhibit the economy and delay national recovery.

September 9, 2010

Australia’s Delicate New Domestic and Strategic Balance: Stability in Defence; Difficulty in Foreign Affairs; Declining Appeal for Foreign Investment

Analysis. From GIS/Defense & Foreign Affairs Station Canberra. It took more than two weeks following the August 21, 2010, Federal elections in Australia for a new Government to be formed — on September 7, 2010 — around a parliamentary majority of a single seat for a new coalition of the Australian Labor Party (ALP) of Prime Minister Julia Gillard, the Green Party (one sitting Member of Parliament) and two independent MPs.

The new composition of the House of Representatives (the lower house) is as follows: ALP 72; Liberal/National 73; Independent 4; Green 1: Total 150. The Agreement between the ALP and the Australian Greens, announced on September 1, 2010, secured the Greens Member Adam Bandt’s vote for Labor. The following day, the independent Member for the electorate of Denison, Andrew Wilkie, also announced that he had decided to support Labor, taking the total number to 74 seats. Two of the three remaining independents’ votes gave Labor a total of 76 seats, a majority in the House of Representatives, and enabled the formation by the ALP of a minority Government.

It will be a Government which will have to tread warily to avoid being removed from office, but it will still attempt to do one of the things which caused the electorate to rebel against the outgoing Labor Government in the first place: it will impose a new round of taxes on the resources sector, the powerhouse of the Australian economy. The Federal Treasurer, and Deputy Prime Minister, Wayne Swan, waited until after the ALP-based Government was confirmed to say that his Government would press ahead with new taxes on the mining and resources sector.

Getting the new 30 percent resource super-tax through Parliament may be the easy part. The ramifications of the tax on the economy may prove to be the thing which builds hostility toward the Gillard Government, bearing in mind that, two weeks after the elections, public opinion polls indicated that 56 percent of voters wanted a new election to provide a clearly-mandated government. The indications were that this would not be a Labor-led Government.

The proposed new taxes on the resource sector were essentially abandoned in the run-up to the August 21, 2010, elections when it became clear that major Australian companies and foreign investors would “vote with their feet” and limit investment in Australia if the taxes were introduced. Based on promises that the tax would not go ahead on the original, aggressive basis, some companies agreed to go ahead with major new programs.

The “tax-and-spend” approach of the Federal Government, under Labor in particular, has also aroused opposition from the State Government of Western Australia — under a Liberal-National Party Coalition team — because the Federal Government has been taking increasing amounts of the State’s earnings, without re-investing commensurately back into the State. Western Australia, with some 10 percent of the voting population, produces overwhelmingly the lion’s share of the country’s overall exports, funding the less-productive, but more voter-populous states of New South Wales and Victoria.

The Gillard Government’s approach was likely to lead, sooner rather than later, to a further reduction of foreign direct investment in Australia, and a reduction of re-investment by Australian companies. This will soon bite into economic growth, and cause Australian banks to pay more for their money, ultimately causing an increase in Australian bank lending rates. Already, Australian dollar bank interest paid is higher by far than interest rates paid by European or North American banks, giving Australian banks a reduced spread of margins with which to operate. Thus, while bank depositors will continue to benefit in Australia, money supply will become constrained, curbing overall economic flexibility. This in turn will impact on voter confidence in the Government, empowering the Liberal-National Party Coalition opposition to push for fresh elections.

It is probable, then, that the delicately-balanced Gillard Government could last only a few months, or up to a year, before it is forced to go back to the polls. In the short term, it is likely that there will be some constraints put on government spending, particularly in the defense sector. Defence Minister John Faulkner had announced before the election that, no matter what the outcome, he would retire from the Cabinet following the August 21, 2010, poll. It was inevitable, even before consideration of a tighter economy, that a Gillard Government would start scrutinizing defense spending more carefully.

No-one, as of late September 8, 2010, could confirm it, but chatter around Parliament House was that the highly-respected Western Australian incumbent Foreign Minister, Stephen Smith, would become Defence Minister so that Prime Minister Gillard could keep a commitment to make former Prime Minister Kevin Rudd the new Foreign Minister. Former number two man in the Defence portfolio (Minister of Defence Matériel & Science), Greg Combet, was now likely to get the Climate Change portfolio, rather than be moved up to Defence Minister, the post he had been groomed to take. Defence would not be disappointed to get Stephen Smith as its Minister; he is conservative, intelligent, and internationally respected. The move to make Rudd Foreign Minister only, however, makes sense in the domestic Australian political sense, given that — despite his now total lack of a political power base — he could single-handedly bring down the Gillard Government if he so chose, given its one-vote margin in the House of Representatives. Rudd, who fancies his abilities in foreign affairs, is actually superficial in the rôle, and despite his claim — as a fairly modest Mandarin speaker — that he could handle the vital Australian relationship with the People’s Republic of China (PRC), has failed dismally in this mission. His comment that the Chinese were “rat-f----ers” makes him viewed with some scorn in Beijing.

Getting legislation through to impose taxes on carbon emissions, however, is going to be difficult for the Gillard Government, which is why the extremely ambitious and competent Greg Combet has been taken from the Defence rôle, for which he had been destined, and moved (as reports have it) to Climate Change. The emissions trading tax is critical for Ms Gillard’s commitments to keep the single Green Party Member of Parliament inside her coalition, and to keep the Greens happy in the Senate, where they hold the balance of power. But delivering on a punitive tax on carbon emissions would severely impact the viability of many Australian businesses, and particularly its coal-dominated electric power generation sector; all of this will impact still further on the appeal of Australia as a destination for foreign direct investment. But the Rudd/Gillard Labor governments have made a clear indication that ideological politics would always take precedence over long-term economic pragmatism. Only short-term political pragmatism — whether or not the ALP could stay in power — determined whether or not the party would play up or play down tax or “climate change” issues.

The Gillard Government has indicated that it would continue to operate within its real spending growth cap of two percent (as per the 2010-11 Budget). This means that a number of Government programs will see reductions in scope and delivery time. However major ongoing initiatives will continue leaving, for example, Defence relatively untouched and overseas commitments in place. Defence will need to meet efficiency savings but they will not affect major equipment activities, although some may be slowed. Of interest is an agreement by Prime Minister Gillard that a parliamentary debate would be held on the Afghanistan war.

It is not only Defence which has been spending heavily. The entire security and intelligence arena — from the Australian Federal Police (AFP), to the intelligence community — has been spending heavily. The Australian Security Intelligence Organisation (ASIO), for example, is to move into a new headquarters building which will, when complete, cost around A$1-billion (US$910-million). A few years ago, the agency was so small and secretive that it hardly rated a mention. Now it, and its sister agencies, are big spenders.

Meanwhile, Michael Wesley, executive director of Australia’s Lowy Institute, noted in The Sydney Morning Herald, on September 6, 2010, that Australia, for all its history of defense leadership in the region, may not be able to retain this lead indefinitely. He noted:

“If Indonesia's military spending grows in proportion to its economic growth, it will not surpass our [Australian] defense budget (assuming ours grows in proportion to our economic growth) until 2048. But Indonesia’s defense spending may well grow faster. Its northern shores are lapped by the South China Sea, a realm of growing military tensions between China and the countries of south-east Asia”

“As the US, China, Japan, and India jockey for bases and positioning in the western Pacific and the Indian Ocean, the Indonesian archipelago will become a strategic fulcrum for that competition. The US and Japan, which worry about China's growing might, are likely to begin investing in the defense capabilities of Indonesia, a large regional country with a traditional ambivalence about [the People’s Republic of] China. And as democracy stabilizes in Indonesia, it will become less worried about its internal order and more interested in the world beyond the archipelago.”

“All this means that in a startlingly short period of time, Australia will for the first time in its history have a more powerful neighbor. This will represent the most profound wrench to our geostrategic situation since the decolonization of Asia 60 years ago. It will mean there will be no relationship as important to us as that with Jakarta.”

He went on to say:

“Another challenge will be that a powerful, Western-leaning Indonesia will pose profound questions about our relationship with the US. Washington will pay a lot more attention to a
strong Indonesia than it does now, especially in the context of a growing rivalry with China [PRC]. If so, it is almost inevitable our importance to the Americans will decline, just as our resentments will rise if Washington helps build Indonesian strength through arms sales, technology transfers, and training. In this sense, Indonesia has far more potential to disturb the Australia-US alliance than China does. “

“A powerful Indonesia will also shake us out of our complacency about Asia. New Zealand and Canada are in a comfortable place because they share the same culture and language as their more powerful neighbor; they understand them implicitly and when push comes to shove, know which levers to pull to get it to see things more their way. This is a skill that extends way beyond their diplomats to all sections and levels of society.”

August 30, 2010

Business as Usual, With Tightening, in Australian Defense, Whichever Party Forms Government

Analysis. From Gregory Copley, Editor, GIS/Defense & Foreign Affairs, in Canberra. It seems clear that the next Australian Government to be formed — either from the outgoing Australian Labor Party (ALP) or the Liberal-National Party Coalition — will maintain virtually the same defense policy and spending profile which has been developed during the course of the past few years. However, almost certainly, there will be some tightening of the spending, particularly as pressures mount on the national budget as a whole.

See Defense & Foreign Affairs Special Analysis, August 23, 2010: Australian Defense Programs Delayed by Political Impasse: New Elections Possible in Near Future.

However, the impasse in selecting a new government has continued since the August 21, 2010, Federal Parliamentary elections for the lower house (the House of Representatives) and upper house (Senate) led to a hung parliament. It now appears that the Liberal-National Coalition will have more seats than the ALP: 73 to 72, but with neither side having an absolute majority in the 150-seat lower house. The fight is on to win some level of support from the four independent parliamentarians and one Green Party Member of the House of Representatives, and this could determine whether caretaker Prime Minister Julia Gillard (ALP) or Liberal Party leader Tony Abbott will be called by the Prime Minister to attempt to form a Government.

In the meantime, under the Caretaker Government, no new initiatives, in Defence or elsewhere, can be taken, but the process of government continues based on existing legislation and policies. But it is now clear that which ever party comes to office, the order of the day will be to increase efficiencies in spending without deviating from the major programs now underway.

Even if the ALP is returned to office, the Defence Minister, John Faulkner, would retire. He has been true to his word: he had agreed to come out of semi-retirement to take the post of Defence Minister under the former ALP Government of Prime Minister Kevin Rudd when a scandal caused incumbent Minister Joel Fitzgibbon to resign on June 4, 2009, over the fact that he had failed — contrary to the prevailing law — to declare gifts from a Chinese business woman. Helen Liu, who had sponsored the Minister’s private travel to the People’s Republic of China (PRC). Sen. Faulkner reluctantly agreed to return to ministerial service at that time, but said that he would continue only until the next election.

Minister for Defence Personnel, Materiel, & Science Greg Combet — pronounced “Combey” — was, when Sen. Faulkner was brought into the ministerial post, raised to the post of “serious understudy”, so that he would be ready to take over the full ministerial portfolio. If Ms Gillard takes office, he will do so. And, according to ALP sources, even though Mr Combet came from the left wing of the ALP, he had become a very pro-Defence minister, anxious to introduce new efficiencies into the Defence portfolio, but not to reduce capabilities.

If the Coalition comes into office, it is likely to name Western Australian conservative Senator David Johnston as Minister of Defence. Sen. Johnston had been a junior minister in Defence during the earlier Liberal-National Government of Prime Minister John Howard. He is passionately committed to strengthening Australian defense, and has been constantly following the Defence portfolio while in Opposition.

Sources in the Australian Defence Department and in the Australian Defence Force (ADF) have reported that they felt comfortable with either candidate for the ministerial post, fearing little change in overall direction of the portfolio other than budgetary pressures which were expected to be felt across the entire Government spending spectrum. There will, however, be slight changes in some priorities, but not in the major programs: the F-35 Joint Strike Fighter procurement; the building of the two new classes of major warships; the decision to move to a next-generation submarine, and so on. But budgetary constraints may see some of the bigger capital expenditures become more drawn out, ensuring that emphasis remains on the tactical warfighter needs for operations in Afghanistan, the Solomons, and other similar ground-force engagements, as well as commitments for Australian maritime space control.

August 23, 2010

Australian Defense Programs Delayed by Political Impasse; New Elections Possible in Near Future

Analysis. From Gregory Copley, Editor, GIS/Defense & Foreign Affairs, in Perth. Australia’s August 21, 2010, Federal Parliamentary elections for the lower house (the House of Representatives) and upper house (Senate) led to a hung parliament, with the prospect that the next Government will be short-lived. However, the outgoing Government of Labor Party Prime Minister Julia Gillard had already frozen activities on major Australian defense programs.

Sources in Canberra indicated that the Gillard Government had — as forecast by Defense & Foreign Affairs analysis in June 2010 — reduced the priority of defense, and there was a prospect that, if it continued in office, the Gillard Administration would substantially reduce the scope of defense as a Government priority. This was forecast in June 2010, when Ms Gillard mounted a political coup within the ruling Australian Labor Party (ALP) to overthrow incumbent Prime Minister Kevin Rudd, whose political fortunes were declining in the run-up to general elections.

See:

Defense & Foreign Affairs Special Analysis, July 1, 2010: Incoming Australian Prime Minister Looking at Prospect of a Snap Election.
Defense & Foreign Affairs Special Analysis, June 24, 2010: Strategic Consequences Likely from Overthrow of Australian Prime Minister Rudd in Run-Up to General Elections.

The process is likely to throw the scheduling of, if not the financial commitment to, some major defense programs into doubt.

However, with the elections producing a hung parliament, the first in Australia since World War II, it was possible that even if the incumbent Prime Minister could assure the Governor-General of her ability (or belief) that she could produce a stable government capable of voting “supply” — that is, budget funding legislation — through both Houses of Parliament, her administration would not last long, and she would be forced to go back to the electorate with fresh elections. It was also possible, however, that Ms Gillard would not be able to assure the Governor-General — the head-of-state — of her ability to form a new Government, in which case the Governor-General would ask the Leader of the Opposition, Liberal Party leader Tony Abbott, to try to form a Government.

Neither major party had a majority of seats in counting as of late August 22, 2010, and the balance of power was being held in the Lower House by a Green Party member and three independents, and in the Senate by nine or 10 Greens. The necessity to win the Greens or the independents will make minority government difficult for either major party (the ALP or the Liberal-National Party coalition).

The election saw some 14 ALP candidates voted out of their seats, reflecting a major backlash by voters against the Labor Government of Prime Ministers Rudd and Gillard. Leftist ALP supporters in many instances moved their vote to the Greens. It was generally acknowledged that the Liberal-National team campaigned well from a position, only nine months earlier, of almost total collapse of that coalition.

It was unclear whether Defence Minister John Faulkner would continue in the post even if Ms Gillard remained Prime Minister, but, in any event, as one senior Defence official noted: “He’s lost his enthusiasm for it, anyway.” The ALP Government’s “elder statesman and key strategist”, Defence Minister Faulkner, 56, had, on July 7, 2010, before the election, announced that he would go to the backbenches after the election, and it is assumed that the electoral impasse has done nothing to alter that view. He had been Defence Minister only since June 2009.

Given the fragility of any Administration which Ms Gillard could put together in the event she is called by the Governor-General to form a Government, it is possible that Senator Faulkner could be asked to remain on the job until the next (imminent) elections are called.

Australia has many tens of-billions of dollars in high-profile new procurement programs pending, including new ship, new Army ground force equipment, and new Air Force aircraft programs (including the F-35 JSF), pending.

July 1, 2010

Incoming Australian Prime Minister Looking at Prospect of a Snap Election

Analysis. From GIS/Defense & Foreign Affairs Station Canberra. Newly-sworn-in Australian Prime Minister Julia Gillard is reportedly preparing to call snap elections to capitalize on the “honeymoon period” following her overthrow of her former colleague as leader of the Australian Labor Party (ALP), Kevin Rudd. Ms Gillard reportedly needs to call the elections before the opposition Liberal Party, under its new leader, Tony Abbott, can make further inroads into the Government’s popularity.

See Defense & Foreign Affairs Special Analysis, June 24, 2010: Strategic Consequences Likely from Overthrow of Australian Prime Minister Rudd in Run-Up to General Elections.

Under normal circumstances, the Parliamentary term would expire by November 2010, requiring new elections. Ms Gillard staged her leadership challenge against then-Prime Minister Rudd in June 2010 on the basis that Mr Rudd’s popularity was eroding to the point where a win at elections in November 2010 could have been problematic.

As it was, Ms Gillard’s success in toppling Mr Rudd did provide a short-term bounce in polling in favor of the ALP, even in Western Australia, which now has a Liberal-National Party Coalition State Government. Western Australia, however, has only 10 percent or so of the electorate, even though the State provides the bulk of Australia’s export earnings. Even so, under Mr Rudd, the seats of two key front-benchers, Foreign Minister Stephen Smith and Gary Gray (Parliamentary Secretary to the Minister for Infrastructure with Responsibility for Western and Northern Australia), appeared to be in jeopardy in the forthcoming elections.

Mr Gray, like Ms Gillard, was born in the United Kingdom.

In terms of the election, according to Australian political sources:

The polling bounce in Western Australia for the ALP is a double-edged sword. It is more the sign of a volatile electorate than a true shift back to solid ALP support.
The electorates of Brand (Gray) and Perth (Smith) are still in play and could shift, however, it is immigration and border control which will move votes towards the Liberal-National Party Coalition in larger numbers than the mining tax, especially in the Brand electorate.
The 40 percent Resources Super Profits Tax on mining companies proposed by former Prime Minister Kevin Rudd is the beginning of the problems if Labor gets back in. Sources within the ALP have indicated that any industry in Australia which earns higher than average profits will be deemed to have “super profits” and would be taxed accordingly. This includes retail, banking, and many other industries. If this broad ALP approach to extending corporate tax becomes apparent in the run-up to the election — and Ms Gillard will work to ensure that it does not — then the outcry from foreign and domestic investors in the non-mining sector could be expected to be politically significant.
Much of Australia’s export wealth has been dependent in recent years on iron ore exports to the People’s Republic of China (PRC), in particular. There has been, as yet, no realization in Australia as to the international shift to alternative suppliers (ie: away from Australia), and other options for new suppliers. The PRC’s economic expansion is again being factored into long-term Australian economic projections which are disconnected from the reality that the PRC market may begin, from an Australian standpoint, a contraction in the near future. The question, from the 2010 elections standpoint, is whether this will be a point of discussion in the coming months.
There is already a recognition in Western Australian financial circles — but not yet in the Eastern capitals of Australia — that PRC acquisition deals have already shifted to rare earths, lithium, and other commodities, with Australians now just one option amongst many. In other words, the bubble of the Australian reliance on the PRC for the preponderance of its economic vitality may be about to burst. Again, from Prime Minister Gillard’s viewpoint, this could only reinforce the need to stage early elections, before bad economic news sets in. The Financial Times, on April 12, 2010, noted the March 2010 “doubling of contract iron ore prices was pushed through by [Australia’s] BHP Billiton and Vale, which supply China’s steel mills from the two nodes of iron ore exports: Australia and Brazil. But China financing stands to open new iron ore provinces like west Africa and Russia, potentially easing the dominance of Vale, BHP and Rio Tinto.” PRC companies were, in May and June 2010, in discussions with Russian companies to acquire major iron ore deposits in Siberia which could also PRC ease demand for Australian iron ore in the medium term.

By early July 1, 2010, it appeared as though the opposition Liberal-National Party coalition did not yet have the strength to topple the ALP at the polls, although the gap had been narrowing between the parties.

June 24, 2010

Strategic Consequences Likely from Overthrow of Australian Prime Minister Rudd in Run-Up to General Elections

Analysis. From Canberra Station, GIS/Defense & Foreign Affairs. The rapidly-emerging leadership challenge to Australian Prime Minister Kevin Rudd resulted, in the morning of June 24, 2010, in Mr Rudd refusing to contest the challenge from Deputy Prime Minister Julia Gillard, who was then elected leader of the Parliamentary Labor Party, and therefore, effectively, as Prime Minister. The most significant ramification of the move was not the election of Australia’s first female (and feminist) Prime Minister — serving under Australia’s first female (and feminist) Governor-General — but the election of what is almost certainly the most left-wing head-of-government in the nation’s history. This will have significant, near-term ramifications for Australia’s strategic direction.

Firstly, Prime Minister Gillard has indicated that Australian troops will be withdrawn from Afghanistan sooner rather than later, with the current indication of a withdrawal by 2012, but, more likely much sooner, as the US begins its own withdrawal by 2011 (something possibly accentuated by the dismissal on June 23, 2010, by US Pres. Barack Obama of US and Coalition military Commander in Afghanistan, Gen. Stanley McChrystal).

Secondly, and ironically, Prime Minister Gillard should be expected to minimize, and possibly postpone, the proposal by former Prime Minister Rudd to impose a 40 percent Resources Super Profits Tax on mining companies which provide the central core/stimulus for the Australian economy. The proposed tax immediately drew a halt to all major new investment in the Australian resource sector, and was the turning point in Prime Minister Rudd’s fortunes, enabling the ultra-left faction of the Australian Labor Party (ALP) to move against him. Ms Gillard will need to obliterate the issue which brought Mr Rudd’s, and the ALP’s, popularity into such decline in an election year, even though Ms Gillard is essentially in favor of increasing taxation and penalization of the private sector. Now, her immediate task is to win the next general election, which must be held before the end of 2010, and the opposition Liberal-National Party Coalition, under Liberal leader Tony Abbott, has been steadily gaining in popularity, particularly in recent weeks. At the same time, however, it seemed unlikely that, even with this swing, Mr Abbott could have unseated a Rudd-led ALP, but the dynamic was enough to cause the Labor left to move against Mr Rudd, who had progressively alienated his Cabinet by authoritarian “rule”.

Thirdly, Prime Minister Gillard should be expected to push strongly for “environmental” legislation, on cap-and-trade taxation and other issues, in the hope of appealing to the left-wing base of the Labor electorate. This will — even absent the Resources Super Profits Tax — continue the Rudd process of alienating inward investment. Within this framework, Ms Gillard is expected to take a line which will appeal strongly to the East Coast electorate, at the continued expense of Western Australia, a Liberal Party state which produces the bulk of Australia’s mineral exports.

Fourth, Australian defense spending is likely to suffer from any protracted term in office by a Gillard Government.

Fifth, Australia’s commitment to its ANZUS alliance with the United States is likely to decline under a prolonged Gillard Government. This will impact on Australia’s significant intelligence exchange relationship with the United States.

Prime Minister Gillard has brought Treasurer Wayne Swan, of the ALP’s moderate wing, into the post she vacated, as Deputy Prime Minister, a move which will in some ways soften the extreme-left image of the new Government. Significantly, when Kevin Rudd — then the opposition Foreign Affairs spokesman — made his own move in late 2006 to topple party Leader Kim Beazley (now Australian Ambassador to the US), Beazley warned Rudd that he, Rudd, did not have enough party support to win the leadership without being beholden to the left-wing faction of the party. As a result, Mr Beazley resigned and asked his own people to support Rudd, giving Rudd an easy passage to the leadership, and then, following elections against a tired, long-running Liberal Party, the Premiership. But it was still not enough; Rudd had to give the deputy leadership of the party to Julia Gillard, and significant power in the Cabinet to the left faction of the party.

This has finally come to the position where Ms Gillard, using Kevin Rudd’s own autocratic powers of alienation to help his downfall, engineered the triumph of the left in securing control of the Government, a situation which the left could not have achieved on its own in the last election. The question is now whether Ms Gillard can keep her left-wing credentials sufficiently modulated so that she can win a national election in November 2010. Like British Labour Party Prime Minister Gordon Brown, who also (like Gillard) assumed the Premiership without benefit of a general election, Ms Gillard faces a situation of growing dissatisfaction with her party and rising Opposition fortunes with but a short period for her to remedy the situation before new elections.

April 22, 2008

Australian Prime Minister’s 2020 Summit Injected Vibrancy Into Strategic Debate, But Key Issues Remained Uncovered

Analysis. By Gregory R. Copley, Editor, GIS. Australian Prime Minister Kevin Rudd’s Australia 2020 Summit, held in Canberra on April 19 and 20, 2008, injected a sense of urgency into discussions about Australia’s strategic policy options. However, the Summit – and its recommendations – was hardly representative of a national consensus; neither did the recommendations cover all the areas which needed covering. Indeed, nor were the recommendations a totally accurate portrayal of the points discussed.

Nonetheless, the Summit was a significant piece of political theater which served to consolidate the new Prime Minister’s command of the Australian popular dynamic.

I was one of 1,000 delegates selected for the Summit by Prime Minister Rudd and his team, and worked in the “national security and prosperity” stream with some 100 other delegates. It was clear that, with some notable exceptions, most delegates selected – perhaps because of the orientation of those who applied for selection – were already committed to the objectives of the Prime Minister and his Australian Labor Party (ALP) policies.

It was, as a result, no surprise that a majority of delegates voted in favor or transforming Australia into a republic, from its present status as a constitutional monarchy. Equally, not one delegate with whom I spoke could articulate the difference in political structure which would apply if Australia changed its status. Moreover, there was no discussion of the legal ramifications for Australia’s states, each of them sovereign constitutional monarchies which had signed to join a Commonwealth – a Federation – in 1901 which was itself a constitutional monarchy.

Ultimately, the Summit issued a more cautious conclusion, calling for the indigenizing of the position of Australia’s head-of-state so that the Governor-General, currently the representative of the Australian Crown (not the British Crown, as even some 2020 delegates assumed), could be de jure head-of-state instead of de facto head-of-state. For the 2020 summit, this was to be an interim step before a referendum to discuss “the type of republican model” Australia should follow, as though the Australian public would now reverse the vote it had undertaken in the November 6, 1999, referendum overwhelmingly (54.4 percent) rejecting such a move.

To some extent, the part of the 2020 Summit recommendation which advocated indigenize the position of head-of-state paralleled the recommendations tabled in December 2007 by Future Directions International (FDI), in its study, Australia 2050: An Investigation Into Australia’s Condition, Outlook, and Options for the First Half of the 21st Century. This study, in its chapter entitled “Governance, Society, Standards of Living”, called for an initial step of indigenizing the Australian Crown, so that the original British symbolism no longer be used, and so that the Governor-General would be seen unambiguously as the head-of-state. But the FDI study went into considerable depth on the legal and social ramifications of transforming the Australian forms of governance, and warned of the dangers of undertaking radical change in a period of great global change.

The FDI study, in the extensive Appendix entitled “Strengthening Australian Identity”, noted: “The vital, delicate, and little-taught role in governance of the Governor-General, and the state governors, is both insufficiently understood at a public level, and nor is it sufficiently well-defined at a Constitutional level. How can Australians be expected to decide on changes to their constitutional system if they do not fully understand it?”

It went on: “Australia, in reviewing its governance structures, may elect to Australianize all aspects of its symbolism. Australian continuity of institutions and governance could be strengthened if the Crown itself was to become Australian, and the highly-successful system of governance was able to be continued unchanged.”

The Australia 2050 study also called for a Constitutional Council of Australia, and this recommendation was also mirrored by discussions in the 2020 Summit.

The 2020 Summit also called for greater development of Australia’s north and north-west, essentially following the reality of the availability of water and broad agricultural lands – and the prospect of new resources there, also, for exploitation – after a valid and deep series of hydrological and geographic studies. This recommendation, too, mirrored the Australia 2050 study’s more detailed recommendations, as did the Summit’s call for a broadening of the economic and labor relationship with the states – particularly the microstates – of the South Pacific.

With regard to the development of northern Australia, the FDI Australia 2050 study recommended: “Australia will need to consider the implications of new forms of water production and infrastructure technologies and also identify sites where strategic regional hubs can be established in the northern Australia to take advantage of high natural rainfall patterns.” That was a brief part of the FDI study in the chapter entitled "Australia’s Infrastructure and Industrial Capacity".

With regard to the question of greater South Pacific political and economic integration, the 2020 Summit and the Australia 2050 study were also in harmony, both stressing the need to provide such an integration as a means of both saving the societies of the South Pacific through labor mobility and for extending Australia’s writ in the region. This was seen in both the study and the summit as as beneficially addressing the continued activities of the two Chinas – the People’s Republic of China (PRC) and the Republic of China (ROC: Taiwan) – in the South Pacific micro-states.

The Australia 2050 study strenuously emphasized the need for Australia to begin developing a range of soft and hard power options, and to be able to integrate them, in the face of emerging strategic challenges which could not be adequately met by expensive (and often inappropriate) hard power and formal diplomatic options. The 2020 summit, however, in its national security session almost entirely avoided discussion of any conventional security options, and instead had an overwhelming number of delegates who disavowed that conventional security capabilities were in future of any value, and threw the weight of recommendations into totally “soft power” options, such as the spread of Australian literacy in Asian languages.

The great weakness of the 2020 Summit was its refusal to address two key issues: total national strategic goals (targets) for Australia in a broad sense, and its refusal to address formal military and intelligence requirements. Moreover, the summit delegates generally appeared to avoid any consideration of the prospect that Australia’s own condition could suffer in direct proportion to any economic or political stumbling within its major trading partners, particularly the PRC, on which Australia depends for the bulk of its export earnings.

These issues were addressed in depth in the Australia 2050 study. They were, however, the “elephants in the room”, and many of the accomplished delegates, in private conversation, agreed that such issues were indeed unspoken but in the back of the minds of the strategic thinkers in attendance.

It would have been remarkable if the summit had been able, in a day and a half, to have captured all the depth of research in the Australia 2050 study, but what was indeed remarkable was the similarity of priorities between the summit and the study. One stream of the summit dealt with “Creative Australia”, and this essentially mirrored the importance which the study gave to symbolism and cultural values in Australia, and the centrality of these to Australia’s ongoing development as a unique power.

As well, the summit broadly endorsed the study’s understanding that Australia must of necessity begin to take a more independent strategic stance, given its differing priorities in some respects from its traditional allies. Nonetheless, mirroring the Australia 2050 note that the US Alliance was still central to Australia, it called for the Prime Minister to give a report to Parliament each three years on the “State of the Alliance”.

It also endorsed a call by this delegate and one other to create a “regional energy security dialog” to help overcome Australia’s emerging petroleum deficiency and to address environmental questions in Australia and the Asia-Pacific region. This very much mirrored the Australia 2050 study recommendations on the urgent need for energy action in Australia. The Prime Minister was present when this delegate called for urgent consideration of new, clean, and rapidly-available indigenous energy capabilities which could be built around Australia’s world-leading deposits of thorium to create thorium power cells.

There were a thousand voices, speaking over a short period. Inevitably, it could produce only headline recommendations, but, given that they almost totally reflected known positions of the Prime Minister, Mr Rudd promised an early response as to how he would deal with them. He, and his key ministers – who were present at the summit, along with the key departmental secretaries and the Chief of Defence Force, for example – already have the Australia 2050 study. So the summit became a galvanizing affair, cementing support for the Prime Minister’s initiatives, to be sure, but also providing a basis on which discussion was begun within the broader community on Australia’s future.

The summit, like the Australia 2050 exercise in grand strategy planning undertaken by FDI, Australia’s center for strategic analysis, was novel, and both approaches – the vocal, participatory strand and the deeply-researched analysis – provide a basis on which other states could create break-points to re-think their own desired futures and the means by which they could achieve them.

December 18, 2007

Concern Over Australia’s Air Warfare Capability Raised Again as Incoming Government Reviews the F/A-18E/F Purchase

Analysis. By Barry Patterson, in Perth. Concerns were raised on December 10, 2007, by an Australian member of the House of Representatives, Dr Dennis Jensen, regarding the previous center-right Coalition Government’s decision to purchase 24 Boeing F/A-18E/F Super Hornet combat aircraft. Significantly, although the criticism did not raise any new technical or strategic issues with regard to the purchase, it did once again focus political attention on the procurement decision, particularly giving the incoming Australian Labor Party (ALP) Government an opportunity to review the contract.

The Super Hornet purchase was an interim measure, intended to cover a strategic shortfall between the Australian Defence Force retiring its aging General Dynamics F-111C/G fleet of long-range strike aircraft,¹ and planned arrival of the first of an order for a possible 100 Lockheed Martin/BAE F-35A Lightning II multi-role combat aircraft. Dr Jensen, a Liberal Party backbencher and former defense research scientist, criticized the decision of former Liberal Party Defence Minister and current Opposition Leader Dr Brendan Nelson to commit to the $6.6-billion purchase of the F/A-18E/Fs without — he believed — considering the strategic capabilities which would be required to maintain a unique, all-weather, long-range strike capability in the South-East Asian region.

This is a view echoed in the security chapters of Australia 2050, the study just released by Future Directions International, which called for the continued deployment — almost regardless of the increasing cost per flying hour — of the Royal Australian Air Force’s F-111 fleet.

The requirement for a new air warfare capability was first formally outlined in the Australia Government’s Defence White Paper, released in 2000. This capability was expected to be needed by 2012, the point at which the aging fleet of F-111s were to be retired. In 2002, the Australian Government signed up to the US-led initiative to develop the F-35 so-called “fifth generation” combat aircraft, previously referred to as the Joint Strike Fighter (JSF). The Australian Government indicated initially that it could buy 100 aircraft at a cost of $80-million each, with no working models yet built.

Australia bought the F-111 (then known as the TFX) on the same basis from the US during the Menzies Administration, and faced a consistent rise in unit costs of those aircraft until it was finally developed and deployed as the F-111A. As part of a consortium of nations, Australia had, as of late 2007, invested almost A$195-million in the F-35 project as a risk-sharing partner. Other nations participating in the development of the JSF include the United Kingdom as a full partner in the project; Italy; the Netherlands; Canada; Norway; Denmark; and Turkey.

In mid-2006 the Royal Australian Air Force (RAAF) formally identified the F-35A as most suitable aircraft for Australia’s future requirements and to be the replacement for both the F-111 variants and the Royal Australia Air Force’s existing fleet of McDonnell Douglas F/A-18A/B Hornet aircraft. On December 13, 2006, the Australian Government entered into a Memorandum of Understanding with the US to further support the development and production phases of the JSF. This was just two days before the first working prototype of the F-35 conducted its maiden flights.

On March 6, 2007, then Defence Minister Dr Brendan Nelson announced the purchase of the 24 F/A-18E/Fs — a substantial development over the original, and slightly smaller, F/A-18A-B model Hornet fighters already in service — to cover the period between when the F-111s were due to be retired and the first run of F-35As were due to be delivered. This was originally expected to be over the period 2012-14. That revised timeframe is likely to be significantly later, due to problems with F-35 development, resulting in a longer operational requirement for the F/A-18E/Fs.

This has raised serious questions regarding Australia’s ability to retain air superiority in the region. While the F-35 has been marketed by Boeing as a fifth generation fighter (the F/A-18E/F does not even rank to fourth generation scale, compared, for example, with the Eurofighter Typhoon, the French AMD Rafale, or even the single-engine Saab Gripen), its capabilities can be challenged by older Soviet/Russian aircraft designs. A recent documentary by the Australian Broadcasting Corporation (ABC) program, Four Corners, on October 29, 2007, has, as well, highlighted the F/A-18’s poor performance against Indonesia’s air assets, in a hypothetical conflict scenario.

A defense analyst also raised concerns that Australia’s neighbors, such as India, Indonesia, Malaysia, and the People’s Republic of China, had been buying Russian aircraft such as new, advanced variants of the Sukhoi Su-27 Flanker as well as the Mikoyan MiG-29 Fulcrum, which often outperform the F/A-18, and, in some areas, rival the F-35. Such aircraft are also cheaper to purchase, maintain and operate. One of the chief motivating factors in selecting the F-111 was its ability to perform long-range missions beyond its borders, a factor significantly reduced in the shorter-range F/A-18E/F, which also carries a smaller weapons payload.

The projection of air power is dependent on more than the basic airframe capabilities, and include factors such as training, logistics, operational doctrine, command and control, and the like. The RAAF has maintained an air combat capability of significantly greater capability — the F-111 aside — than any of its immediate neighbors, and, despite a diminishing qualitative lead, continues to do so. The Indonesian Air Force (TNI-AU), for example, has only four Su-27 and Su-30 combat aircraft, none of them equipped with advanced weapons or sensors.

Outside of the US, no nation has committed to purchase the Boeing F/A-18E/F, other than Australia. Singapore signed a contract on December 12, 2005, to buy 12 Boeing F-15G Eagle fighters — a heavier fighter of older design origin than the F/A-18, but, like the Super Hornet, upgraded with current onboard systems — to be delivered in 2008/09.

Defense analysts have suggested that there are a number of other aircraft which may be more suited to Australia’s air warfare requirements, including the Boeing F-15E Strike Eagle, given its mission as a strike system, replacing the longer-range F-111s While the political realities of Australia’s strategic alliance with the US suggest that any such alternatives will be of a US design, a number of other alternatives exist, such as the European Eurofighter Typhoon, and the Russian Su-27/Su-30 variants. None of these types, however, has the payload/range and low-level, terrain-hugging capabilities of the F-111. Moreover, for a variety of reasons such as interoperability with US forces and integration with the RAAF’s command and control and sensor/weapons systems, acquisition of the Russian designs would be less than practicable.

While the F/A-18E/Fs are expected to be delivered in 2009, and ready for operational duty in 2010, there is no certainty that the new Australian Government, led by Prime Minister Kevin Rudd, will ratify the previous Government’s commitment to the F-35A, potentially changing the assumptions under which the F/A-18E/Fs were considered for purchase.

Australian Defence Minister Joel Fitzgibbon is expected to conduct a review of Australia’s military air power and outline the new government’s policy regarding the procurement of the next generation aircraft. This is likely to precede the release of a new Australian Government defense white paper in 2008 outlining broader defense objectives.

There have been a number of reasons why the F-35A acquisition may be reconsidered, however, in reality, there are very few alternatives for the RAAF other than the F-35, other than a mix of F-35s and other systems, including unmanned aerial vehicles (UAVs) and unmanned combat aerial vehicles (UCAVs). The F-35 is still effectively in a testing phase, and prototype craft were recently grounded after issues with the electrical system forced a test aircraft to emergency land on July 10, 2007.2 Problems have also occurred with the power generation unit, furthering delaying the commencement of full production runs.

To a degree, the F-35’s value is in its stealth characteristics, which is the result of new airframe design. However, advanced internal systems designed for the F-35 — or at least systems based on the same technologies — including radar, communications, and certain avionic systems, are likely to be incorporated into existing third and fourth generation aircraft before the F-35 becomes operational. This has raised the option, for many nations, to upgrade current aircraft with new components, extending their operational

life at a fraction of the cost of purchasing new aircraft. Such an option has been raised for the F-111s, although the airframe is likely to require replacement by 2020. This was recently raised by Future Directions International landmark study entitled Australia 2050, launched on December 4, 2007, at Parliament House in Canberra:

Australia, as the United States is doing, will need to consider keeping some systems in service for longer periods, even when they are technically not cost-effective. The Collins-class SS vessels, in the future, and the F-111s today, fall into this category. It is worth remembering that the US B-52 Stratofortress bombers have been in service since 1954, and will be in service until 2040, a period of almost 90 years. It is not that the B-52 represents the potentially most cost-effective solution to the strategic mission, but, in essence, extension of its operational life reflects the only feasible option. Equally, in many respects, the F-111 is the only weapon system which gives Australia continuing long-range strike capability, enhancing (and freeing) the capabilities of the F/A-18A/B and E/F models and F-35s and unmanned combat aerial vehicles (UCAVs) in the future. The high cost of maintenance hours versus flying hours becomes essentially irrelevant in preserving strategic military advantage. The advanced technology found in the F-35 requires a highly-sophisticated software infrastructure to integrate all of its components and allow the aircraft to function. However, access to the software source code required to modify, service, and upgrade the aircraft’s systems has been closely guarded by manufacturers Lockheed Martin and BAE Systems, and maintenance and upgrades to the aircraft will be completed by the companies, which will likely maintain regional maintenance centers. This may limit ADF’s ability to modify the aircraft as it has successfully done with the F-111s and its older fleet of F/A-18A/Bs.

Wavering financial contributions from the F-35 project’s international development partners, fluctuating procurement orders and concern in US domestic political environment over the ever-increasing development cost of the project, have resulted in a rising per unit cost. While Australia initially expected to pay A$80-million per aircraft, this has since risen to A$100-million per aircraft. It is very possible the unit cost could rise even further. The total cost of the project so far is thought to be A$341-billion, 28 percent more than the original estimate of A$265-billion in 2001. This is also combined with a reduced production run, for both the US and internationally, from an initial 3,500 to 2,300 currently. A further reduction in production is expected.

The proposed procurement of the F-35A (and F/A-18E/F) is also occurring on the cusp of major changes in defense technology and force composition. While Australia has selected a conventional take off and landing (CTOL) configuration for the JSF, designated F-35A, it has been suggested by defense analysts that Australia may benefit from mix of F-35As and F-35Bs, a short takeoff and vertical landing (STOVL) variant. While the F-35A is more fuel efficient, the F-35B could be utilized as a maritime asset and operate from the Royal Australian Navy’s new Canberra-class large amphibious ships (LHDs), due to enter service in 2013.

While the JSF is designed to fulfill a relatively long-range strike capability in Australia’s arsenal, it is unlikely to be operationally active as long as the F-111. Increasingly, Unmanned Combat Aerial Vehicles (UCAV) are becoming the preferred choice for some — but clearly not yet all — roles due to their low per-unit purchase cost, minimal training, operation and maintenance requirements, compared to manned fighters, and the low political cost when such aircraft are lost. While the technology for UCAVs is still being refined, it is likely they will form a significant part of most nations’ air power over the next two decades.

How the Australia Government responds to the procurement of the F-35As and F/A-18E/Fs will affect Australia’s military superiority in coming years. This issue will become more pressing as Australia’s relative technological superiority continues to decline.

Footnotes:

1. The Royal Australian Air Force operates a number of variants of the F-111 including the RF-111, the F-111A/C. The F-111G was retired in 2007, but the aircraft remains within the RAAF inventory.

2. Boeder, J; F-35 JSF Hit by Serious Design Problems, Defense Industry Daily, December 3, 2007.

March 7, 2007

Australia is First to Pay a Strategic and Financial Price for F-35 Delays

Analysis. By Gregory R. Copley, Editor, GIS. Australian Minister of Defence Brendon Nelson on March 6, 2007, confirmed earlier press speculation that the Royal Australian Air Force (RAAF) would opt for a purchase of 24 Boeing F/A-18F Block II Super Hornet multi-rôle combat aircraft, at a cost of approximately A$6-billion ($4.645-billion) to fill the gap between the decline of Australian strike and air defense capabilities until the delivery of Lockheed Martin F-35 Lightning II Joint Strike Fighters.

In many respects, however, the acquisition merely patches over the declining air power superiority which Australia has historically maintained in much of the Asia-Pacific region since World War II, because the F/A-18F Block II — which will come into service with the RAAF only in about 2010, roughly the same time the F-35 had originally been expected to be operational — is barely able to maintain its own in air combat terms with other fighters in the region, notably the Mikoyan MiG-29 and its follow-on variants, and the Sukhoi Su-27/30 and its follow-on variants.

Minister Nelson noted: “The Howard Government has delivered solid economic management and Budget surpluses over a decade. We are now in a position to deliver this for Australia. The acquisition of the Super Hornets will be fully supplemented as part of the 2007/08 Budget process. The JSF is the most suitable aircraft for Australia’s future combat and strike needs. Australia remains fully committed to the JSF. But the Government is not prepared to accept any risk to air combat and strike capability during the transition to the JSF.” In fact, the pay-out on the new aircraft, which were scheduled to be based at Amberley Air Force Base, Queensland (the present home of the F-111C/Gs), would be over a 10-year period.

The initial agreement provides for the acquisition of the aircraft, and upfront training for aircrew and maintenance personnel. However, although the Minister said that the Australian Government would now negotiate an Australian Industry Participation (AIP) program with Boeing and the US Navy, the negotiating advantage lies with Boeing itself, not with Australia, because the Australian Government had literally run out of options with regard to a bridging program until the delivery of the F-35. [Because of the stop-gap nature of the F/A-18F purchase, the AIP will almost certainly focus around lifecycle support for the Super Hornets, not industrial participation in the program itself.] Significantly, former Australian Foreign Minister and Ambassador to the US, Andrew Peacock, is now Chairman of Boeing Australia, and he lobbied hard for the F/A-18F solution.

Indeed, the only low-cost program would have been a modernization of the existing RAAF F/A-18A/B Hornet fighters, and this would not have given sufficient performance to meet long-range strike requirements to fulfill the missions assigned the retiring General Dynamics F-111C/G aircraft. What was little discussed, even for the sake of gaming out the options available to Australia, were the other options available: acquisition of, say, Eurofighter Typhoons, AMD Rafales, or even Russian types such as the MiG-29 variants or Su-30 variants.

In reality, however, the Australian political and defense planning executives were largely locked, culturally, into the US options, and the only other option available from the US (apart from F/A-18 Hornet upgrades, would have been Lockheed Martin F-16 Block 52 or Block 60 aircraft, which lack the range and payload of the F/A-18Fs (which in turn have some compatibility and training/logistics advantages, because of the common US Navy parentage, with the F/A-18). The Boeing F-15 option, which was in fact still marginally available to Australia, was discouraged by Boeing, largely because continuation of the F-15 Eagle line would have interfered with planning for the F-35.

The Australian Government statement that the F/A-18F acquisition would “provide a more flexible operational capability than currently exists with the F-111” glosses over the reality that reliance on the F/A-18F actually limit range and payload options in strategic strike missions to which it had become accustomed with the 1960s-vintage F-111s. But the F-111, with or without a replacement, is no longer viable on a cost-per-flying-hour basis; it is simply now too expensive to sustain in service, and only lingers in marginal operational readiness until its full retirement in 2010. Australia’s strategic strike and long-range air combat capability is now not just dependent on the F/A-18F, but also on the strategically-vital RAAF tanker capability provided by the four Boeing 707-338Cs currently in aerial refueling service until replacement tankers are delivered in the near future.

The Australian Defence Force (ADF) ow anticipates the first RAAF F-35s would be delivered in 2013 to achieve a 2015 IOC.

It seems clear that as many as possible of the existing RAAF’s 55 McDonnell Douglas AF/F-18A Hornet tactical fighters; and 16 AF/F-18B Hornet tactical fighters and operational trainers would be retained in service to provide a secondary air defense and close air support rôles, but only with a minimum time overlap, possibly until the F-35s are delivered. That would mean that, from the 2010 in-service date of the F/A-18Fs until the delivery of the F-35s, Australia would still suffer a lower level of air combat capability than defense analysts feel would be ideal.

The RAAF AF/F-18As and Bs underwent a three-phase HUG (Hornet Upgrade) program, completed in 2006, so they retain some years of service life ahead of them, more than would have been the case had the F/A-18F not been secured to take on some of the burden. [On February 28, 2006, then-newly-appointed Defence Minister Dr Brendan Nelson announced that Lockheed Martin’s Joint Air-to-Surface Stand-off Missile (JASSM) had been selected as the new long-range air-to-surface missile to equip the RAAF’s F/A-18A/B Hornet combat aircraft. The missile was planned to be operational by December 2009, and would provide the RAAF with a long-range strike capability, enabling it to withdraw the F-111 aircraft currently, but only marginally, in service.]

The acquisition of the Super Hornet tacitly acknowledges the growing complexity and capability of the threat environment in which Australia finds itself over the coming decades, not so much from, say, Indonesia — which is acquiring Su-27s and Su-30s in small numbers — but from India and the People’s Republic of China (PRC), which are acquiring more and more advanced Russian-built combat aircraft, many of which will, in the coming decade, be based on carriers in the Pacific and Indian oceans. And the native air combat capabilities of the MiG and Sukhoi variants being deployed are more than a match for the F/A-18F, despite claims by the US. Moreover, both India and (particularly) the PRC are working toward a generational improvement in airborne target acquisition capabilities and beyond-visual-range air-to-air missiles (AAMs) which Australia and the US are by no means guaranteed to match.

The PRC’s People’s Liberation Army-Air Force (PLAAF) is now deploying its indigenously-developed PL-12 beyond visual range, active radar-guided missiles on inboard wing stations on its air-refuelable Chengdu J-10 fighters. Sinodefence.com noted: “In the late 1990s, the US Office of Naval Intelligence estimated that the J-10 could be as maneuverable as the U.S. F/A-18E/F Super Hornet. With its advanced “fly-by-wire” system, the J-10 may have a better aerodynamic performance compared to the Russian Su-27, which still uses the conventional control method. The Hong Kong-based newspaper Sing Tao Jih Pao reported on 29 May 2004 that during an aerial war game conducted by the PLAAF, the J-10 fighter has beaten the Su-27 fighter in all three rounds of ‘dogfight’ in the mid-air.”

Significantly, the fly-by-wire technology incorporated into the J-10 and FC-1 fighters in the PRC was derived entirely from a Honeywell system provided to the PRC by the US Clinton Administration during the 1990s in a clear violation of the intent of US technology export guidelines, and, it is understood, in response to illicit or questionable payments to US officials. See also, Defense & Foreign Affairs Daily, November 8, 2004: Advanced Chinese and Pakistani Fighter Utilizes Illegally- or Accidentally-Transferred Sensitive US Technology, and Defense & Foreign Affairs Special Analysis, May 16, 2006: New PRC Combat Aircraft Prototype Still Dependent on Clinton-Era US Technology.]

The PLAAF J-10s were also equipped with PL-8 short-range air-to-air missiles, a variant of the Israeli Python 3 AAM. But as far as the PL-12 is concerned, proliferation into other states, notably Pakistan (aboard the new JF-17 Thunder fighter), should be expected. The PLAAF is also putting the PL-12 aboard its J-11B fighters, a variant of the Sukhoi Su-27 fighter, which will probably carry as many as six of the missiles. This is significant because, advanced as the J-10 is, the target acquisition radar on the J-11B provides for longer-range acquisition than the J-10’s radar.

Indeed, US concern over the PRC’s air power projection capabilities, typified in the advanced aircraft and airborne weapons and their associated target acquisition systems, has led Washington to begin a major program to support the Republic of China Air Force (ROCAF: Taiwan) efforts to upgrade its air combat capabilities. The airborne weapons race in the Asia-Pacific region is, therefore, now underway in earnest. Moreover, the PRC is, like India, actively deploying airborne cruise missiles of an advanced nature; the BrahMos in the case of India (naval version already deployed), and the DH-10 in the case of the PLA.

The F/A-18F will provide the RAAF with a reasonable platform in the new long-range air weapons environment, providing the prospect that the aircraft would not then get engaged in close air combat situations, in which the Su-27/30 and MiG29/35 families of aircraft are markedly superior. But the growing distortion of the Australian defense budget, because of the mounting F-35 costs and delays, means that Australia can only deploy a fraction of the air power units — aircraft — it once fielded into an environment of lower threat capabilities and numbers.

In other words, in the numbers game, Australia’s relative position in the Asia-Pacific military balance is declining, despite the increasing commitment to defense by the Australian Government of Prime Minister John Howard. Moreover, the ADF is becoming increasingly innovative in order to demonstrate maximum flexibility to meet potential threats and mission requirements. But, even in these attempts, it is fighting a difficult battle: its six Boeing 737-700NG Wedgetail AEW aircraft, for example, have been subject to delays.

The major cost to Australia’s overall strategic posture in this situation of rising costs and increasing delays in advanced defense systems has been that instead of bringing about a realization that greater defense industrial self-reliance was an achievable ideal, it has meant that any thoughts of indigenous defense industrial autonomy were being thought-of as unattainable.

See: Defense & Foreign Affairs Special Analysis, April 7, 2006: Australian Defense and Parliamentary System Looks at Issue of Developing Major Warship Industry.

Meanwhile, in order to maximize the flexibility and reach of its limited air capabilities, the RAAF needs desperately to upgrade its aerial tanker capabilities. To achieve this, in April 2004, it ordered five EADS/Airbus A330 multi-rôle tanker-transports (MRTT) for delivery in 2007.

But ultimately, the delay in the F-35 may mean that the RAAF will opt for a greater dependence on unmanned air combat vehicles (UCAVs) to undertake a number of key missions, freeing manned combat aircraft for certain critical missions. In many respects, the RAAF began seriously planning for this option early in the process.

[Then-Defence Minister Robert Hill said in May 2005 that Australia would remain a partner in the F-35 Joint Strike Fighter development program beyond the ongoing systems development and demonstration phase, and that Australia planned to acquire about 100 conventional take-off and landing versions (rather than the short/vertical take-off and landing variant) of the fighter, waiting until 2008 to make a production decision. And in defense budget proposals for 2005-06, the Minister outlined the reinstatement of programs to add new air-to-surface weapons to the RAAF’s F/A-18s and P-3Cs; the Lockheed Martin JASSM cruise missile and Boeing SLAM-ER were the primary contenders for the mission. By 2009, it was planned that tactical UAVs would perform surveillance and target acquisition missions for Australian ground forces and would also have a maritime mission.]

It should be expected that, while Boeing may be reaping short-term rewards on the Lockheed Martin F-35 delays, Australia will begin moving increasingly toward UAV options. This, along with maintaining a significantly high level of military and industrial skill levels, is one of the few obvious options available to Australia to sustain its technological advantage in an increasingly capable regional military environment.

When asked on March 6, 2007, whether Australia would keep the F/A-18Fs and have a mixed JSF and Super Hornet fleet after the F-35 came into service, Dr Nelson said: “That is an option available to government. A final decision will be made during the next decade to either maintain a mixed fleet or ‘on-sell’ the Super Hornets and acquire the fourth squadron of JSF. The clear preference is likely to be four squadrons on JSF.” The answer will almost certainly be that the RAAF will have the option to either add-to, or replace, the Super Hornet/F-35 mix with UAVs.

See also: See Defense & Foreign Affairs Special Analysis, March 30, 2006: Can Australia Survive the Next 50 Years?]

April 7, 2006

Australian Defense and Parliamentary System Looks at Issue of Developing Major Warship Industry

The Australian defense industry, Department of Defence and Royal Australian Navy (RAN), and the Australian Parliament are engaged in an increasingly complex debate over whether or not to develop the local shipbuilding industry to build and support large naval vessels. Significantly, the Defence Department and RAN as well as much of the industry has thus far taken a short-term view and has argued against developing a major national maritime industry expansion to cope with future national maritime requirements.

GIS/Defense & Foreign Affairs Editor Gregory Copley, in Australia at the time, was asked to testify before the Australian Senate Committee on Foreign Affairs, Defence, and Trade’s Inquiry Into Naval Shipbuilding on April 3, 2006, based on his background in strategic analysis and because of his background in naval shipbuilding. The following is an edited version of his testimony, given in the open hearing:

The Committee’s Inquiry looks at four parameters of vital interest to Australia’s strategic position:

The capacity of the Australian industrial base to construct large Naval vessels over the long term and on a sustainable basis;
The comparative economic productivity of the Australian shipbuilding industrial base and associated activity with other shipbuilding nations;
The comparative economic costs of maintaining, repairing and refitting large naval vessels throughout their useful lives when constructed in Australia vice overseas; and
The broader economic development and associated benefits accrued from undertaking the construction of the large naval vessels.

This submission addresses these terms of reference in a broader strategic framework which is essential to seeing the specific questions within the context of Australia’s strategic requirements.

Former US Secretary of State Henry Kissinger once changed the old homily when he stated: “If you don’t know where you’re going, any road will take you there.” This witness, in a current strategic manual, suggests, rather: “If you don’t know where you’re going, any road will ultimately lead to disaster.” And current pressures on defense spending and on the workload of Australian Defence officials has brought their concerns down to more-or-less immediate and short-term considerations, rather than on the long-term grand strategic and military strategic requirements of Australia.

The Defence Department, in its submission to this Inquiry, questioned the wisdom of building large warships in Australia, warning that local construction had the potential to hurt the wealth of the nation by drawing scarce skills away from non-defense projects, and noted that there was “no strong strategic reason” to build the Navy’s next generation warships in Australia.¹

That argument reflects, nominally, only short-term concerns about labor availability, but more realistically, reflects the Navy’s traditional “cultural cringe” about Australian project leadership. It does not reflect the ultimate strategic reality in which Australia must survive and prosper over the next half-century, and that the RAN must reverse its century-long failure to fully embrace and work with the national infrastructure.

Similarly, the arguments in the submission by Western Australian small-vessel shipbuilder Austal that local shipbuilding capabilities could not compete in commercial or naval markets for very large steel ships, such as the planned amphibious vessels for the RAN, and that construction of such vessels could hurt the existing shipbuilding industry by draining its workforce, are short-term, self-serving to the company, and fail to address the actual strategic realities in which Australia should function when making such vital national decision as the Inquiry is addressing.

The submission by Adelaide (South Australia)-based submarine and surface combatant builder ASC that the Navy’s future warships should be built more on commercial lines, with far shorter service lives, to avoid “costly mid-life refits”, also reflects self-serving approaches to the subject, and fails to consider the historical reality of defense systems development or Australia’s strategic requirements.

Moreover, the strategic environment in which Australia must operate within the next decade — quite apart from the contextual realities of the next half-century — are changing so substantially that basing decisions on the viability of large-ship Naval construction solely on short-term commercial parameters could severely jeopardize Australian security and economic competitiveness in the longer-term.

The Australian public expects that the Senate will, on all matters, act as the chamber of review on all aspects of the governance of the Commonwealth, and therefore take the longer-term and broader view of issues, helping the Government and Society to think beyond immediate pressures and short-term desires. And it is upon the matter of Australia’s maritime dependencies which the foundation of the national strategic interests lies in the longer-term.

Moreover, failure to provide for the maritime mission to the fullest would do a great disservice to the Royal Australian Navy, which is arguably, in almost all respects, one of the most capable, efficient, and highly-regarded navies in the world, man-for-man and dollar for dollar.

1. The Strategic Environment Impacting Australian Naval Capabilities Over the Foreseeable Future

1.1. Maritime Trade Dependence: Australia is significantly more dependent on maritime trade for its economic and strategic survival than at any time in its history, and will become more dependent on this aspect of its life over the coming decades. It is, in fact, far more dependent on maritime trade for continued prosperity and survival than was the United Kingdom when it operated with the Royal Navy’s Articles of War, and the pertinent chapter cited at the head of this Submission.

Australia’s present fortunate strategic circumstances, for example, do not reflect any immediate, or immediately-foreseeable threats to the delivery of vital commodities, such as energy, to Australian shores, nor a threat to Australian commodity exports caused by actions of a hostile maritime nature. However, the degree of dependence on such exports and imports, and the nature of potentially hostile capabilities impacting Australia is changing now and is expected to change dramatically over the coming decade.

Australia’s present production of petroleum was expected to decline by 15 percent in 2003-04, and again further in FY 2004-05.² In fact, Australia’s self-sufficiency in crude oil production fell from 90 percent in 2001 to 70 percent in 2004. In other words, 30 percent of Australian oil, by 2004, had to be imported; a major change from just three years earlier. More dramatically from an Australian strategic perspective, over the next decade from 2004 (ie: by 2010), Australian self-sufficiency was forecast to drop to somewhere between a further 20 percent and 50 percent, a factor which places a significant demand on the onshore and maritime infrastructure requirement for Australia. And even of the domestic production of energy, militarily vulnerable offshore oil and gas in 2004-05 supplied some 85 percent of national energy demand, As well, most major Australian hydrocarbon prospects lie offshore, as do the resources being tapped for Australia’s most significant LNG exports to buyers such as Japan and the People’s Republic of China (PRC).³ The vulnerability of the most vital Australian strategic assets, then, is substantial, which accounts substantially for the devotion of Australian special forces resources and deployment to essential infrastructure protection.

In a conventional conflict environment, Australia’s offshore energy infrastructure would be substantially more vulnerable even than in a period of unconventional (terrorist/subversive) threat, placing the greatest onus for protection on the Navy and the Air Force. The broader threat context is discussed in detail later in this submission, but includes the changing reality of growing naval capabilities and clear evidence of maritime strategic intent by the navies of the PRC, India, Malaysia, Indonesia, Iran, Israel, and Pakistan.

In particular, changes are occurring in the regional security situation, including (i) very substantial changes in the naval capabilities of India and the PRC, projecting more strongly into the Indian Ocean and with a view to dominance of choke points and sea lanes of communications (SLOCs) vital to Australian trade; (ii) the growing possibility of strategic competition between India and the PRC, not in the immediate term, but within a decade and beyond [ie: during the anticipated life-cycle of the proposed Australian Naval vessels], which could involve the security of vital Australian maritime imports and exports; and (iii) the proportionately declining capability of extra-regional Australian allies (US, UK, Japan) to substantially act within the Indian Ocean maritime environment to the benefit of Australia.

1.2. The Changing Geopolitical and Threat Environment: At all times in an historical perspective, the linear projection of past, or existing, threat/conflict environments has failed to adequately prepare a nation for the future. Defence forces traditionally prepare “to fight the last war”. Australia’s defense planners have made remarkable progress in overcoming this syndrome. However, although the RAN is, in fact, gearing toward a rôle in coping with a ballistic missile threat to the fleet and to Australian infrastructure (with the acquisition of Air Warfare Destroyers), there is little evidence that full account has been taken of the substantially changing global strategic environment which will challenge Australia over the coming half-century. This goes well beyond a mere understanding and extrapolation of defence technology and weapons trends, and goes into an understanding of the changing nature of sovereignty, and historical aspirations of competing societies.

Some of the longer-term aspects of the strategic framework in which Australia must operate were outlined in the paper Can Australia Survive the Next 50 Years?, presented to the Australia-Israel Chamber of Commerce Future Paradigms series of lectures, on March 28, 2006, in Perth. As those aspects are extremely pertinent to determining the framework of future Australian defense (and particularly naval) procurement. [See Defense & Foreign Affairs Special Analysis, March 30, 2006: Can Australia Survive the Next 50 Years?]

Fundamental to the emerging “Age of Global Transformation” is the reality that sovereignty issues are transforming substantially, and that India and the PRC, in particular, are engaged in a major strategic process which has a number of variables which could lead to (a) strategic implosion within the PRC, leading to possible external misadventures; (b) strategic competition between India and Pakistan; (c) strategic competition between the PRC and the United States; (c) possible unmanageable disintegration of Indonesia due to the already-evident “fissiparous tendencies” within what could be described as the Indonesian (Javanese) Empire, with profound implications for Papua New Guinea, Australia, and the key South-East Asian SLOCs; and (d) major strategic changes with regard to Iran and other Middle Eastern and Horn of Africa nations, again vitally impacting SLOCs critical to Australia.

Already, within the coming year or two it is possible that Australian maritime trade could be substantially impacted by a resumption of the Eritrea-Ethiopia conflict, possibly jeopardizing the security of the Red Sea/Suez SLOC. As well, within the coming year or two, it is possible that Iran could embark on strategic, hostile military operations against Israel (and other Western targets), significantly resulting in closure of the Persian Gulf/Strait of Hormuz SLOCs and Indian Ocean-based naval actions between Israel and Iran.

Within this framework, even in the short term, it is clear that Australia’s interests only coincide with, or overlap, US strategic interests to a certain degree, and that Australia must undertake military planning which is independent to some degree from US operations.

Increasingly, over the coming decade, and particularly beyond the coming decade, Australia will have strategic military interests which are distinct from those of the United States, and Australia cannot expect to be dependent upon the US for strategic protection. This is not to deny the ongoing need for a strong US-Australia strategic relationship.

Australia’s trade and strategic relationships with a variety of Asian states had, by 2006, already caused differences in priorities between the US and Australia, differences which, at this stage, caused no US-Australia friction. However, it cannot be assumed in the longer term that Australia and the US will always have an identity of interest on all strategic issues. Moreover, it would be unreasonable to expect that Australia should be able to expect to rely on the United States for its strategic survival. Indeed, giving the changing strategic framework, it is as likely that the US will depend as much in, say, two decades, on Australia as Australia depends on the US.

Moreover, Australia has now spent a century as a strategic dependent of, first, the United Kingdom, and later as a strategic dependent of the United States. It is clearly time, given Australia’s growing needs and the changing environment, that Australia begin to assume strategic responsibility for its own survival, not merely as a junior partner in a coalition condition, but as a leader in its own right. Whether Australia wishes to face this challenge or not, the reality is that it has no alternative to the assumption of mastery over its own fate, or face relative strategic decline in relationship with the region.

Everything about the changing — and increasingly fluid — strategic environment facing Australia impacts on the missions of, and demands on, the Royal Australian Navy, and yet the principal considerations with regard to Australia’s ability to sustain itself as a maritime-dependent nation has failed to take into account maritime industrial self-sufficiency or leadership.

The specifics of the growing asymmetry between Australia’s blue water naval capabilities and those of other regional and extra-regional powers since the 20^th Century need further detailed study. Until this point — that is, from the late 19^th Century colonial period and throughout most of the 20^th Century — Australia’s strong naval professionalism, including its ability to sustain global naval projection gave Australia a marked strategic advantage over all other regional powers, including the People’s Republic of China. That is no longer the case. Not only do other regional powers (including India, and, to a degree Pakistan and Iran) have a strong blue water naval projection capability, a number of states now are beginning to assume naval supremacy over Australia in a numerical and technological sense.

Even disregarding the PRC’s substantial penetration of the Indian Ocean (which represents only part of Australia’s maritime region of interests), the Indian Navy (IN) is substantially more capable already in many areas of maritime power projection. At present, and within the framework of foreseeable conflict scenarios of the coming decade, this should not represent a threat to Australian interests, but in the event of an India-PRC conflict — which on no account can be absolutely discounted — India would find Australia’s ongoing supply of LNG to the PRC of strategic concern, placing the question of vulnerability of Australian energy facilities at the center of the equation.

India already has deployed naval surface-to-surface weapons systems (such as the BrahMos supersonic anti-shipping cruise missile, against which the RAN has no existing or potential guaranteed defenses. [BrahMos is a modified and advanced version of the Russian 3M-55 (SS-N-26) Onyx anti-ship missile.] The PRC has a similar capability in the SS-N-22 Moskit (Sunburn) ASM (anti-shipping missile), currently deployed in the Indian Ocean.⁴

[Significantly, the PRC’s People’s Liberation Army-Navy (PLAN) is already deploying high-speed catamaran warship technology copied from Australian technology, but coupled with advanced surface-to-surface missile capability. In other words, China has taken Australian maritime technology and coupled it with other systems to achieve a naval capability which Australia has yet to match. When FDI raised the matter of the PRC’s unlicensed acquisition of the catamaran technology with Austal, the Western Australian shipbuilder which originated it, the company replied that it was beyond China’s capability to copy the Austal technology, a statement which defies logic.]

India currently maintains a fleet-deployed naval air capability which Australia cannot at present match, and India is building a substantial extension of its maritime air power component with two new major carriers (with fourth-generation MiG-29MKI fighters, superior to Australian tactical aircraft), and expanded shore-based, long-range maritime air capability, all with offensive strike capability (air-launched BrahMos, apart from other systems). The PLAN is also planning its foray into carrier-based air power within a decade or so.

In the submarine field, India and the PLAN already field substantial, advanced capabilities which, although possibly not at the same qualitative capability of Australia’s Collins-class submarines, certainly surpass Australia’s capabilities in terms of numbers. In this regard, Pakistan’s submarine capabilities are growing, and have a capability in the area of Australia’s SLOC interests, while ASEAN navies certainly are adding to their submarine capability in areas of Australian SLOC interests. At the same time, Iran’s clerical Government not only has a significant submarine capability with three imported Russian Kilo-class (Proj. 877 EKM) submarines, it also has a stated intent to block Western (including Australian) interests in acquiring oil through the Straits of Hormuz linking the Persian Gulf with the Indian Ocean.

The maritime threat environment is, therefore, becoming more dense, more complex and capable, and more potentially hostile, at a time when Australia will be required to be strategically more self-sustaining and more capable.

The longer, then, that Australia delays in acquiring the instruments of an independent, self-sustaining maritime defense capability, the more its places itself in jeopardy.

2. The capacity of the Australian industrial base to construct large Naval vessels over the long term and on a sustainable basis.

2.1. Australia’s historical naval shipbuilding capabilities. Australia has for a century proven capable of building, and even designing, warships and commercial ships of all sizes and missions. Indeed, the construction of ships is a technology which has long been mastered by Australia. The only questions which arise, from the standpoint of this Inquiry, are the matters of (i) cost-effectiveness, and (ii) advanced systems integration. The hull and propulsion systems, on average, are valued at 40 percent or less of the overall system (ie: the total warship), and these aspects (hull and propulsion) represent the least complex aspects of the projects.

It is significant, then, that Australia has, with very few exceptions,⁵ opted for foreign designs when selecting its major warship solutions. Australia has the demonstrated capability to design, build, and integrate complex ships, including naval vessels. The design development and systems integration entailed in the Collins-class submarines demonstrated that scale and complexity were within Australia’s grasp. Moreover, it is significant that the United States Navy (USN) is currently considering an Australian advanced catamaran design solution for its Littoral Combat Ship (LCS) following the successful — albeit almost forced — decision by the Royal Australian navy to use an Australian civil catamaran solution (HMAS Jervis Bay) as a logistical solution during the East Timor transition from 1999 onwards.

It is logical to assume, then, that an Australian capability exists to evaluate the specific Australian mission requirement for a new amphibious ship, and then to design a ship specifically for that requirement, and build it. That is well within the Australian skill-set. Moreover, with the same creative, Australian private-sector input which developed the high-speed catamaran solutions for the LCS competition in the US (and, indeed, for China’s new class of patrol catamaran, the People’s Liberation Army-Navy 2208-class PTG), it is probable that a more cost-effective solution could be achieved to the true strategic requirement than from the foreign competitors currently bidding for the two-ship contract.⁶

2.2. Australian Submarine-building Capabilities. Australia proved, with its construction of six Collins-class conventional patrol submarines that it had, a considerable cost to the taxpayer, been able to build some of the best submarines in the world. Despite the media’s desire to repeatedly transform developmental challenges into “problems”, and repeat them, ad nauseum, as clichés, the Collins-class built by ASC has proven to be almost unparalleled in terms of its silence of operation, perhaps only bettered by Japanese-built submarines. It has repeatedly proven its capability to defeat even US anti-submarine warfare sensors in rigorous fleet exercises.

But despite its success, and despite the reality that neighboring powers are now eclipsing Australia’s great power projection capability with the Collins, due, if nothing else, to their ability to field greater numbers of good boats — such as the Kilo-class and Improved Kilo-class of Russian-built SSKs — Australia has allowed its submarine-building expertise to wither away. If considerations of economic viability were all that were at stake, the Australian Government would not now attempt to teach a submarine builder how to be a major surface combatant vessel builder, granting ASC the contract to build the three Air Warfare Destroyers (AWDs). There will be an expensive learning curve in that exercise, but to what end? If the Commonwealth was committed to ensuring the retention of industrial capabilities within the country, then why would it consider allowing the ASC submarine skills to be eroded? The move begs the question as to whether it would have been better for Australia to have committed to (a) building more Collins-class submarines for the RAN, improving the design as it moved forward; and/or (b) pursuing, as it should have done from a much earlier time, the sale to the export market of Collins-class boats, instead of accepting “conventional wisdom” that the vessels were “too expensive” for the world market.

While it may have been desirable to also build an advanced surface combatant capability at ASC, in order to create competitive advantages with existing frigate-builder Tenix, it should be recognized that the decision was taken for strategic and political reasons, not based on developing an economic — or even an optimal infrastructural — rationale for the naval shipbuilding capability of Australia. Indeed, the momentum to build up the long-term capabilities of Australia in this sector at one stage seem then to be overturned at the next stage by jumping to new projects. Thus, skills are built for the long term, and then abandoned, indicating a lack of a consistent, bipartisan understanding of Australian strategic needs spanning the terms of governments.

2.3. RAN Project Support Capabilities. In the run-up to the delivery of the Collins-class submarines to the RAN by ASC in 1993, the RAN lost its long-held in-house capability to manage refits for the Oberon-class submarines, which had been in RAN service for some three decades. The RAN had, because of budget constraints, moved so much of its capability from “tail” (ie: support) to “teeth” (ie: combat capability) that it lost its ability to manage routine tasks which hitherto had been handled without question. As a result, the Oberon-class submarines left service prematurely and Australia experienced an unnecessary capability gap before full service capability had been achieved for the Collins-class.

It is possible that the real problem is not the capability of Australian industry to meet the design, build, integration, and support needs of the RAN, but, rather, the confidence level of the Royal Australian Navy and the Defence Department. Whereas many government suffer from a “not invented here” syndrome, favouring local thinking over foreign, the reverse is true in Australia, not just with regard to Naval shipbuilding, but to many aspects of defense thinking. Such a mentality condemns Australia to a “junior partner”, or follower, position into the indefinite future, with the unfortunate reality that Australia may not have access, within a few decades, to a “senior partner”.

3. The comparative economic productivity of the Australian shipbuilding industrial base and associated activity with other shipbuilding nations.

3.1. Direct economic productivity. It is generally assumed that in the construction of low-value added ships — large oil tankers, bulk carriers, and similar vessels — countries with low skill-sets and low wages have an advantage. This is certainly true when the predominant portion of the vessels’ costs is in steel assembly and engine installation. It is not true of higher-value-added vessels, such as warships, or even specialist ships such as research vessels, and even some LNG carriers. The measure of this lies in the reality that high-wage states, including the US, Canada, Italy, France, Spain, Germany, the Netherlands, the United Kingdom, Sweden, Israel, and others, all maintain viable shipbuilding, and particularly warship-building, industries. Significantly, high-wage countries such as Israel, Sweden, Denmark, and others which maintain sophisticated warship construction capabilities are significantly smaller in resource, and overall GDP terms, than Australia.

3.2. Economic productivity versus strategic security. Economic productivity has as much to do with the relative commercial appeal of certain forms of risk, and optimal approaches to capital formation, as it does with direct economic viability of a project. In some instances, then, certain forms of investment may be less attractive to normal commercial investment than others. However, certain forms of infrastructural investment are vital to develop a long-term national strategic capability, and the support of a national security capability certainly falls within the category of a vital strategic requirement.

All major powers in the world achieved their status by long-range planning, usually commencing their focus some 50 years in advance of realization. Australia, although progressing gradually, although often erratically, toward improved wealth, has not yet begun to undertake coordinated planning for the long-term, independent strategic positioning of the nation in a “grand strategy” sense.

As a result, the planning for an economically viable, strategically critical Naval construction and support capability within Australia has never occurred. Australia, for commercial reasons, and during the two World Wars, developed an innovative, world-class shipbuilding, aerospace, and defense industrial capability, much of which was not only allowed, but encouraged, to dissipate with the end of major hostilities so as not to compete with “parent” British capabilities. It is worth recalling that Australia developed the first motorized torpedo in the world, as well as developing many of the initial, and follow-on, milestones for the world aerospace industry, and in all instances abandoned the leadership it should have retained in these arenas.

Theodore Roosevelt, before he became US President in 1904, was appointed as Assistant Secretary of the Navy in 1897, after having already authored the well-received History of the Naval War of 1812. It was from that early “bully pulpit” that he began to shape the destiny of the United States as a great, self-sustaining and wealthy power by ensuring the US the ability to defend its seaways. He not only foresaw the changing global strategic dynamic, he also understood the specialist technologies which were then required to develop the US shipbuilding industry to make it independent of foreign supply. This marked the beginning of US strategic capability, which blossomed into certainty — and success — when the US went to war with Spain in 1898.

What is significant is that the US consistently pursued maritime leadership from that time, and its major compromises as a strategic power were when it neglected shipbuilding leadership (such as the belated move of the US Navy from battleships to carriers, which not only penalized the US at, and following, Pearl Harbor, but also can be said to have created the sense of vulnerability which allowed Japan to contemplate the Pearl Harbor and Philippines attacks — immediately followed by the attacks on Darwin — in the first place).

Australia’s shipbuilding industry, in the private sector, has demonstrated a strong capability toward innovation, speed, and economy of action. Australian ship exports have grown significantly, including the export sale of Australian designed and built patrol vessels during the past few years to the Republic of Yemen (10 Bay-class-derived fast patrol boats for the Yemen Navy; patrol vessels for the Kuwaiti Ministry of Interior, etc.). Moreover, Australia in the 1990s and early 21^st Century successfully built an entirely new submarine construction industry and a new class of submarine (Collins-class) which surpassed virtually any other conventional submarine capability in the world. The fact that the then-Government-controlled Australian Submarine Corporation (now ASC) failed to capitalize on this capability in the export marketplace reflected not that the industrial capability was inferior, but that the corporate management and export experience were insufficiently experienced and open to competing on the world market.⁷ Moreover, it is worth comparing the fact that Sweden, a country substantially smaller than Australia in population and GDP terms, not only designed and produced the original submarines on which the Collins-class was based, it also produces one of the few fourth-generation advanced fighter aircraft in the world.⁸

The development of advanced technology defense systems, from aircraft to ships, creates a broad network of technological and scientific value throughout the national economy. Participation in defense projects as a component manufacturer creates little other than direct employment. The Committee is urged to study the development of the Israeli Rafael family of companies, which began entirely in the defense sector and now — while still undertaking key defense research, development, and production pertinent to Israel’s unique security requirements — creates spin-off companies which utilize the capabilities in the civil sector. The measurable contribution to the Israeli civil economy is in the-billions of dollars, but the immeasurable contributions in security and in stimulating a base of research, and capabilities, are possibly more valuable.

An Australian commitment to full management of Naval ship construction, from conception, through to design, manufacturing, systems integration, and support, can be both directly and indirectly profitable. There is little doubt that it will compete with other sectors of the economy for capital formation and employment, and this generates a challenge for the private and public sectors. However, the failure to make the commitment has a higher, and more dangerous longer-term cost to the society.

The appeal of other capital investments and the demand of other employers, currently facing the Australian economy, is short-term, and will pass or change in nature. The requirement for Australia to develop an independent, self-sustaining and deep strategic industrial capability is long-term, critical, and overdue. Simply stated, Australia cannot expect to become a major strategic power if it does not develop and mature its critical strategic industrial infrastructure as quickly as possible. And if it fails to become a major strategic power, given the current and foreseeable changes in the global strategic framework, then it will gradually deteriorate in terms of its ability to determine its own destiny, including its economic and social outcomes.

4. The comparative economic costs of maintaining, repairing and refitting large naval vessels throughout their useful lives when constructed in Australia vice overseas.

4.1. The cost of maintaining, repairing, and refitting large naval vessels throughout the service lives will remain more economic if appropriate skills and facilities exist in Australia compared with undertaking such actions abroad. The cost must be measured not only in direct economic terms, but also in terms of (i) the ability to maintain acceptable overall fleet operational readiness levels while individual ships are off-line for maintenance or repair; and (ii) the risk to the actual ability to have critical work undertaken on the vessels in times of crisis. In most instances, in other words, it would be necessary to have larger numbers of vessels available — with commensurate manning and initial capital costs — if one or more vessels are to be rotated through maintenance, repair, or refit at any given time.

4.2. The suggestion by one Australian company (ASC) that the RAN should consider having “commercial standard” vessels built for naval combat operations — in other words, ships built to a lighter construction standard than warships — so that they would be more economical to build, and thus could be discarded rather than having their service lives extended through refits and upgrades, does not reflect the reality of the combat environment.

Firstly, there are many instances in which vessels built to a purely commercial ship standard would not meet appropriate survival or operational criteria in true conflict situations. For example, combat vessels not only need to be kept afloat after being struck by a weapon or suffering (for example) a collision at sea, as do all ships under the Safety of Life at Sea (SOLAS) requirements, in order to help ensure the safety of crew, the reality is that warships must often continue in operation after suffering combat damage, and the reality is that merely “saving lives” after an initial hit is often not able to considered. Subsequent damage in a combat situation is possible — unlike a merchantman which has suffered an accident — and the necessity exists for the warship to continue its combat functions for as long as possible.

Secondly, in most instances, the ship — the hull and machinery — is not the main technological or cost concern; it is the overall system. Service life extensions and mission changes are the norm; they are not the exception. The ship is merely a platform, and upgrades to offensive and defensive systems, sensors, and other functions are ongoing. Indeed, it is the need to modify weapons systems “on the fly” to perform new missions which is the most pressing need when a crisis hits. The modification of ships, aircraft, and other systems by the British forces during the Falklands crisis in 1982 was profound and urgent; there was no question of weapons systems being taken off-line for protracted periods of time (or to be sent abroad) for modifications or service. The requirement must be met in-country. Australia’s urgent response to the East Timor crisis, with the rapid acquisition, militarization, and use of the commercial ship, the Jervis Bay, was another example.

That is not to deny that progress in technology and techniques in the commercial shipbuilding and ship repair sectors should be studied, and used, by the naval shipbuilding sector. The cross-fertilization of skills, technologies, and techniques has been long overdue. However, it would be a mistake to believe that “commercial shipbuilding approaches” can satisfy the combat naval requirement. The construction of the Austal Armidale-class warships to commercial standards, for example, and the use of unarmored aluminum hulls and superstructures means that those warships have limited viability in a true combat environment. They are useful only as patrol ships in unopposed power projection missions. And the “successful” deployment of the Armidale-class and the Austal Bay-class Customs patrol vessels should not be mistaken for a true naval construction capability, despite the company’s very efficient use of manufacturing processes which could contribute to a naval shipbuilding capability.

5. Conclusions and Recommendations

5.1. Australia has all of the essential ingredients to have a strategic, and cost-effective, capability in the maritime defense sector, moving into the long-term, and particularly at a time when changing global strategic realities demand that Australia achieve self-sufficiency in this area. However, it is equally clear that lack of long-term thinking has consistently squandered this capability, and consistently — at great expense to the taxpayer — reverses the momentum toward this essential asset development.

5.2. Australia has consistently underplayed its skills in the strategic industrial base arena by willingly embracing the rôle of junior partner in its own defence projects. This has added cost to the projects and allowed the priorities and parameters implicit in imported major systems to be imposed on Australian requirements. Given that Australia faces strategic realities which demand increasingly self-sustaining leadership in national security affairs, it is vital that Australia recognise its skills in the national security industrial resource arena, catalogue them, and begin to develop an over-arching strategic industrial strategy for the future.

5.3. In the short-term, to preserve capabilities already extant in Australia, it is essential that the Commonwealth move to order at least two additional Collins-class submarines, not only to maintain the skill base, but also to meet the growing challenge of a proliferating threat to Australia’s maritime interests. At the same time, the Commonwealth Government — and Australian industry — should begin to work together more effectively to develop an international marketing capability to sell Australian strategic industrial capabilities to qualified and allied states abroad.

5.4. Australia’s capabilities to design, build, and integrate systems, with regard to major naval vessels is unquestioned, if inadequately supported. However, where Australia has shortfalls, in particular, is in some areas of systems and in on-board weapons. Australia has had a policy of procurement of such capabilities, including whole vessel design, from other states, often from lesser powers. But now Australia faces a new strategic environment, and is being eclipsed and challenged by weapons systems built and deployed by, for example, the PRC and India. This places Australia at a strategic disadvantage.

5.5. The practice throughout the Western world of minimizing career and capital formation geared toward heavy industry in favor of service industries has destroyed much of the foundation of a balanced strategic economy. This applies as much to Australia as to the US and Western Europe. To overcome some of this distortion of the national infrastructure, and to aid in the development of a viable maritime industry going forward, it will be necessary to take a strong stand toward bolstering the trade skills sectors, as well as, at the same time, striving toward a maritime industry which is highly-automated. By adopting to the fullest degree possible a process of automation and high-technology solutions, along with fully-flexible labor practices, Australia can compensate for its high labor costs, thus continuing to attract investment and orders to Australian shipyards. This practice, which I adopted at my Ailsa-Perth group of companies in the UK in the 1980s and 1990s, we called “Sunrise Engineering”, and we successfully moved heavy engineering away from the high-cost, environmentally unfriendly “sunset industry” approach.

Footnotes:

1. See Australian Defence Department submission, also cited in The Australian, March 31, 2006: “Defence casts doubt on building warships here”, by Patrick Walters, National Security Editor.

2. Akmal M, Thorpe S, Burg G and Klign N, ABARE, Australian Energy: National and State Projections to 2019-20, eReport 04.11, August 2004, pp.36-37. Cited in FDI’s study, “Australia’s Energy Options”, submitted to Parliament in October 2005.

3. “Australia’s Energy Options”, Future Directions International; Perth, 2005.

4. The PRC’s People’s Liberation Army-Navy (PLAN) deployment in the Indian Ocean is approximately as follows: Submarine(s) detached for patrol: 1-2 SS (Improved Kilo-class or Kilo-class); Escort units: Possibly 1 DDG (Sovremennyy 956A) as surface action group flagship, with the SS-N-22 Moskit ASMs; 1-2 DD (Luda); 2+ FF (Jiangwei and Jianghu); 10 PGG/PTG (Houjian, Houxin, Huangfen, and Houku); 10 PC (Hainan and Shanghai-II); MCM Forces: 2+ MSC (2+ T-43); Amphibious forces: 1 LST (1 Yuting) possible, mix of LCU and LSM, other small landing craft; Support force: 1-2 oilers, 2+ large freighters used as ammunition/stores ships. Source: Global Information System.

5. One of the few recent exceptions has been the selection of a local design, and local systems integration, for the 12 56.8m Armidale-class patrol vessels, which were designed, built, and deployed in record time (to replace Fremantle-class, starting 2005; lead ship commissioned June 24, 2005). However, it is important to recognize that the RAN did not regard the Armidale-class vessel as being a “major warship”, and did not impose on it the same constraints as it did on the more complex and larger AWDs and the proposed amphibious ships now under consideration.

6. Based on the RAN’s desire for a foreign design, Australian contracts have teamed with foreign shipbuilders on this bid. Tenix has teamed with Spanish shipbuilder Navantia; Armaris of France has teamed with ADI. Significantly, the Australian naval tradition of the past century has been in many respects more accomplished than the naval traditions of Spain and France, and yet the RAN feels more comfortable in allowing contractors from Spain and France to take the lead on this Australian vessel requirement. As well, Defense & Foreign Affairs Special Analysis on February 22, 2006, in a report entitled RoK Moves to Develop Defense Supply Relationship with Australia, noted: “The Republic of Korea, which has been moving to expand its defense export programs into South-East Asia — notably Indonesia — has begun to focus on the export of technology to Australia, particularly related to the Royal Australian Navy’s three-ship Air Warfare Destroyer (AWD) program, due to enter service in 2013. The AWD parallels in many key aspects the RoK Navy’s three-ship KDX-III Aegis-equipped destroyer program, due to enter service in 2008-12.” While Australia should unquestionably learn from the experiences of others, it begs the question as to which country Australia would not be prepared to play second fiddle, especially given the reality that Australian combat naval operations during the past century certainly rival those of Spain and France in many respects, and those of the Republic of Korea in virtually all respects.

7. Australian Submarine Corporation, for example, failed in the 1990s to follow up direct offers of introduction and help in promoting the sale of Australian-built submarines to the Egyptian Navy, despite guaranteed US funding of the project, even though the then-Commander-in-Chief of the Egyptian Navy had requested such help through this writer. The Egyptian Navy still has not achieved its goal of acquiring the new submarines it needs, because of a combination of political factors which Australian industry involvement could have overcome.

8. Sweden’s population in 2002 was 8,876,744, with a GDP of compared with Australia’s almost 20-million in the same year. GDP comparisons are Sweden US$227.4-billion (2000); Australia US$394-billion (2000). Australia, in 1946, produced the world’s fastest piston-engine fighter, and later designed the fighter developed in the UK as the English Electric Lightning. Today, Australia produces no major combat or civil aircraft as a prime contractor; Sweden produces light transport aircraft and the Saab JA-37 Gripen fourth-generation fighter.

March 18, 2005

Australia-PRC Relationship Hampered by Contradictions and Lack of Contextual View

Analysis. By Andrew Pickford, GIS, in Perth, Australia. Conflicting diplomatic signals from the People’s Republic of China (PRC) to Australia have obscured broader strategic developments which show the PRC to be more active, and potentially more assertive in the Indian Ocean Region than ever before. China’s ambition and strategic requirement to project power into the Indian Ocean, which has been evident, albeit nascent, for almost three decades, is now becoming reality.

Evidence has also emerged which suggests defensive and assertive positioning by the PRC to serve its broader, and longer-term security objectives. The formal election on March 13, 2005, of PRC Pres. Hu Jintao to the Chairmanship of the Central Military Commission (CMC) — finally completing the transition of power to Pres. Hu from former Pres. Jiang Zemin — provides a timely point to look at the PRC’s growing confidence in its overall power projection, and Australia’s relationship to that.

Analysis of each PRC statement, by itself, inevitably falls short of painting a complete picture of the emerging geopolitical framework of which Australia finds itself part. In other words, the piecemeal approach which the public has to the ongoing development of Australia-PRC relations — arguably among the most important bilateral relationships in which Australia is engaged — is hampered by the fact that no overall contextual framework, or picture, has been laid out, within which the individual statements and issues can be understood.

For example, within the space of one week a top PRC official, He Yafei, PRC Foreign Ministry Director-General of North American and Oceanian Affairs, has told The Australian messages which seem to be at odds with one another.

On March 3, 2005, He Yafei told The Australian: “We are satisfied with the interactions between our two militaries ... but certainly we can do more. The military-to-military relationship between our two countries is growing steadily, with lots of visits. It is a great way to reinforce confidence-building ... Australia and China can both play a role in maintaining regional peace and stability.”

On the surface, the process of improving military ties between Australia and the PRC appears to indicate goodwill and the upgrading of a relationship which has progressed well in areas such as trade. At present two-way trade between Australia and the PRC totals more than $20-billion a year. The demand for natural resources has led to a complementary relationship between the two economies. One of the main types of resource contracts has been Liquefied Natural Gas (LNG)¹; Australian LNG is set to supply energy to many new PRC coastal-based industries.

Nevertheless a deepening trade relationship with the PRC and Australia’s traditional ties with the US, underpinned by the ANZUS alliance, represent a challenge for Australian policymakers. Foreign Minister Alexander Downer illustrated this challenge when in 2004 in Beijing he said that the ANZUS treaty would not automatically require Australia to assist the US in a conflict with the PRC over the Republic of China (ROC). While Prime Minister John Howard corrected this statement it showed the PRC that Australia could be moved, or perceived to move, on the issue of ROC independence.

Dr Adam Cobb, director of Stratwise Strategic Intelligence, presented a thesis to explain such events. In establishing high-value long-term resource contracts, particularly in LNG, he argues that the PRC is attempting to drive a wedge into the Australia-US alliance. This is an interesting proposition that warrants consideration. The statement by He Yafei, again in The Australian, on March 8, 2005, seems to support this:

“We all know Taiwan is part of China, and we do not want to see in any way the Taiwan issue become one of the elements that will be taken up by bilateral military alliances, be it Australia-US or Japan-US. If there were any move by Australia and the US in terms of that alliance (ANZUS) that is detrimental to peace and stability in Asia, then it (Australia) has to be very careful.”

On the basis of the March 8, 2005 statement it seems that Cobb’s thesis is proved to be correct. However, what does this mean for comments made March 3, 2005, by He Yafei regarding closer military ties?

These statements by the same official show that the PRC is — quite naturally — starting to exert its international muscle. Yet as the PRC begins to look outward and consider itself as a regional, and in many ways a global power, consideration should be made to historical precedents and PRC’s overall strategic posturing. Looking at isolated comments by a diplomatic official does not fully encapsulate the current situation. Hastily reacting, in an ad hoc manner, to each seemingly threatening or friendly comment has the potential to give the appearance that Australia can easily be shaped and coerced with little thought of broader strategic goals.

Historical Lessons? It may possible to get an understanding through historical comparisons of the PRC’s perception that it is now ready and able to address a long-anticipated expanded area of interest. Other than overland trade routes such as the Great Silk Road — which the PRC is also aggressively addressing once again in the context of modern technologies and in light of the new nation-state structures of Central Asia — the ocean has provided a window for China to interact with the wider world.

During the Song Dynasty (960-1279CE) China deployed one of the world’s most powerful and technologically-advanced navies. In a RAND report, Bernard Cole found: “The Song maritime experience was based on a rapidly expanding national economy, with a particularly strong maritime encompassing commerce, fisheries, and transportation. As the navy was expanded and modernized, so were the port facilities, supply centers, and dockyards; soldiers trained specifically as marine and coast guard squadrons established.”²Furthermore, before the decline of Chinese naval power during the Ming Dynasty (1368-1644CE), China possessed a naval force which was well beyond European capabilities. Perhaps the pinnacle of achievements was when Zheng He, in the early 15th Century, led voyages to the Middle East and Africa. This maritime tradition, forgotten in the West, is high in Chinese naval consciousness.

In a return to the past, the PRC is again making its presence felt, and finding its strategic interest, in these same areas, namely: the Indian Ocean Region and the Middle East. A report prepared for the US Department of Defense reflects these sentiments. Energy Futures in Asia, produced by Booz Allen Hamilton, a management consultancy, describes this new strategy: “China is building strategic relationships along the sea lanes from the Middle East to the South China Sea in ways that suggest defensive and offensive positioning to protect China's energy interests, but also to serve broad security objectives.”³

The report also stated that China is adopting a “string of pearls” strategy of bases and diplomatic ties stretching from the Middle East to southern China that includes a new naval base under construction at the Pakistani Baluchistan port of Gwadar.⁴

The now firmly-established PRC naval presence in Gwadar is already helping the PRC gain a strategic foothold in the Persian Gulf region, as is Beijing’s strong strategic commitment to supporting the Iranian clerical Government. The port of Gwadar about 400km from the Strait of Hormuz, the entrance to the Persian Gulf and perhaps the most significant energy chokepoint in the world.⁵

Similar to the rise of an outward-looking navy during the Song and early Ming Dynasty, the PRC is building up military forces and setting up bases along sea-lanes from the Middle East to project its power overseas and protect its oil shipments. When considering the statements made by He Yafei it would appear that the PRC views Australia and resources, such as LNG, as one node or even a distant “pearl”. When viewing PRC actions through this perspective diplomatic dialogue, however muddled, can be better understood.

The Booz Allen Hamilton report for the US Defense Department suggested, “defensive and offensive positioning”. This is perhaps the more interesting development and warrants consideration by Australia. The WGR identified a PRC magazine which emphasizes offensive military doctrine. This was published in Beijing Jianchuan Zhishi and written by Wang Zaigang. It was entitled The Nemesis of Super Aircraft Battle Groups, and noted, in part:

Establishing a Strategic Guiding Ideology for the Offensive “To fight aircraft carriers” requires the establishment of a correct strategic guiding ideology that will determine the direction of development of weapons and equipment and the build up of the force. The initiative is essential against an aircraft carrier battle group. That is, when a large and powerful aircraft carrier battle group is coming to intervene, we must take the initiative and attack it. We must destroy it or drive it back to 2,000-3,000 kilometers or more from the shoreline, and not allow it to approach closer. The offensive is essential because “evasion” and “concealment” is useless under the eyes of hundreds of satellites and in the face of the “Tomahawk” cruise missiles with their range of thousands of kilometers, which every carrier battle group has. Trying to hide can only mean passively taking a beating. If we hope to win this war, we must attack and repel the big and powerful aircraft battle carrier battle group beyond our gates.

Developments in ideology that moves the PRC to offensive posturing “to fight aircraft carriers” should be carefully considered.⁶On the other hand, isolated comments by PRC diplomatic staff may mask the actual direction and focus of broad strategic objectives. If Australia better understood these objectives it could avoid knee-jerk reactions to such statements. Moreover in historical terms, considering the age of Chinese civilization, Zheng He’s voyages to the Middle East and Africa are relatively recent event.

Australia would be best served if it articulates a clear, consistent strategic policy when the PRC starts to make its presence felt in the Indian Ocean Region.

Footnotes:

1 Liquefied Natural Gas, abbreviated to LNG, is natural gas that is cooled to liquid form in order to transport across oceans in large specific built ships. When natural gas is cooled to a temperature of approximately -260°F at atmospheric pressure it condenses to a liquid called liquefied natural gas (LNG). One volume of this liquid takes up about 1/600th the volume of natural gas at a stove burner tip. LNG weighs less than one-half that of water, actually about 45 per cent as much. LNG is odorless, colorless, non-corrosive, and non-toxic.

2 The Organization of the People’s Liberation Army Navy (PLAN) by Bernard Cole in The People's Liberation Army as Organization: Reference Volume 1.0. Arlington, Virginia, 2002: RAND Corporation, p 460.

3 Energy Futures in Asia is discussed in: Bill Gertz, The Washington Times, January 18, 2005.

4 Other “pearls” in the sea-lane strategy include:

Bangladesh: The PRC is strengthening its ties to the government and building a container port facility at Chittagong. The PRC is “seeking much more extensive naval and commercial access” in Bangladesh.

Myanmar (Burma): The PRC has developed close ties with the Government in Rangoon and turned a nation which had traditionally been wary of it into a “satellite” of Beijing close to the Strait of Malacca, through which 80 percent of China's imported oil passes. The PRC is building naval bases in Myanmar and has electronic intelligence gathering facilities on islands in the Bay of Bengal and near the Strait of Malacca. Beijing also supplied Myanmar with “-billions of dollars in military assistance to support a de facto military alliance,” the Booz Allen Hamilton report said.

Cambodia: The PRC signed a military agreement in November 2003 to provide training and equipment. Cambodia is helping Beijing build a railway line from southern China to the sea.

South China Sea: PRC activities in the region are less about territorial claims than “protecting or denying the transit of tankers through the South China Sea,” the report said. The PRC also is building up its military forces in the region to be able to “project air and sea power” from the mainland and Hainan Island. The PRC recently upgraded a military airstrip on Woody Island and increased its presence through oil drilling platforms and ocean survey ships.

Thailand: The PRC is considering funding construction of a US$20-billion canal across the Kra Isthmus which would allow ships to bypass the Strait of Malacca. The canal project would give China port facilities, warehouses and other infrastructure in Thailand aimed at enhancing PRC influence in the region, the report said. [The Kra Canal concept was considered by US strategists in the 1970s, using nuclear blasting to create the canal. As a report, entitled Kra Canal, in Defense & Foreign Affairs Digest, 2-1974, noted: “Such a waterway has been envisated for almost 200 years. The younger brother of King Rama I, of Thailand, suggested in 1793 that it would be well to cut across the Peninsula further south than the current (1973) plan, avoiding the mountains, to allow operations against the frequent Burmese invasions by land and sea.”]

5 Defense & Foreign Affairs Daily on July 8, 2002, noted that Pakistan Pres. Pervez Musharraf, on a visit to Japan, had also sought Japanese funding for Gwadar’s development, and for the Torkham-Gwadar highway which would make the port more viable for economic and naval use. Gwadar also offered an alternative port to the Pakistan Navy, which had, until Gwadar’s development, been highly vulnerable to attack and isolation from Indian forces within its main base port of Karachi. On November 14, 2000, Defense & Foreign Affairs Daily carried a report entitled Pakistan's Strategic Gwadar Port Project on the Baluchi Coast Delayed by Lack of Funds, noting: “The Pakistan Government had been seeking construction and technical support for the project from the Government of the People's Republic of China (PRC), a move which could have strategic ramifications considering the PRC's existing use of port facilities in Myanmar, to the East of India. … Baluchistan provincial Governor Amirul Mulk Mengal reportedly took up the issue with a PRC delegation which visited the Baluchistan capital, Quetta, recently and discussed the possible PRC economic and technical assistance for the port and linking Gwadar with the railroad system at Dalbandin, the most strategic township linking South Asia to Central Asia.” The plan developed rapidly. On May 24, 2001, Defense & Foreign Affairs Daily, in a report entitled PRC and Pakistan Float Idea of Deploying PLA Navy Fleet to Baluchistan Port Near Strait of Hormuz, noted: “Pakistani sources on May 23, 2001, indicated that the People's Republic of China (PRC) and the Government of Pakistan had agreed that a PRC People's Liberation Army-Navy (PLAN) fleet should be based at the Pakistan Navy base at the deep ocean port of Gwadar — the Pakistan Navy's second base — on the extreme Western coast of Pakistan, in the Province of Baluchistan on the Arabian Sea, adjacent to the Strait of Hormuz. The covert understanding to deploy PLAN fleet elements was reportedly reached during the four-day visit (May 11-14, 2001) of PRC Prime Minister Zhu Rongji to Pakistan. No indication has yet been given as to the composition of a proposed PLAN fleet deployment to Gwadar, although GIS/Defense & Foreign Affairs Daily sources said that the PRC had planned for some time on such a projection. The early indication of such planning lay in the fact that the PRC assisted in the recent expansion of Gwadar port facilities.” … “Pakistan News Service on May 23, 2001, quoted sources in the Pakistan Ministry of Defence as saying that ‘Pakistan had blessed the Chinese with the honor of building the Gwadar deep sea port as well as upgrading its naval installations in Omara Naval Base in order to keep a vigilant eye on the Arabian Sea as well as the Gulf’. ‘The decision is a landmark," a Pakistan Foreign Office official was quoted as saying, "as it a tactical deterrent to the mighty Indian Naval establishment in the Arabian Sea and the Indian Ocean.’ A source at the Karachi Naval Dockyard said that the ‘Chinese arm’ would make the difference felt for the Indians ‘busy in intimidating Pakistan under one pretext or the other’.”

6 The People’s Liberation Army-Navy (PLAN) already maintains a significant permanent flotilla in the Indian Ocean. The Global Information System (GIS) noted that, even by 2003 and before the escalated presence at Gwadar, the PLAN Indian Ocean Flotilla consisted of: Submarine(s) detached for patrol: 1-2 SS (Improved Kilo-class or Kilo-class); Escort units: Possibly 1 DDG (Sovremennyy "956A") as surface action group flagship; 1-2 DD (Luda); 2+ FF (Jiangwei and Jianghu); 10 PGG/PTG (Houjian, Houxin, Huangfen, and Houku); 10 PC (Hainan and Shanghai-II); MCM Forces: 2+ MSC (2+ T-43); Amphibious forces: 1 LST (1 Yuting) possible, mix of LCU and LSM, other small landing craft; Support force: 1-2 oilers, 2+ large freighters used as ammunition/stores ships. Of key significance within this existing PLAN Indian Ocean capability is the specifically anti-carrier missile capability of the Sovremennyy-class heavy guided missile destroyer (DDG) with its eight Russian-built SS-N-22 Sunburn (P-270 Moskit or 3M-80/-80E) anti-ship missile launchers. No Western countermeasure has yet been developed for the high-speed Sunburn/Moskit anti-shipping missile, which was developed specifically to destroy heavy aircraft carrier-type targets. Quite apart from the possible deployment of the Sovremennyy-class DDG in the Indian Ocean, the four of the type have been ordered, with two already in service, by PLAN for its Eastern Sea Fleet, specifically to counter any possible US Navy interference in PLA amphibious operations aimed at Taiwan.

The Author:

Andrew Pickford is Research Fellow with Future Directions International, the Perth-based Australian strategic policy institute, and editor of FDI’s Weekly Global Report. He is also a Research Fellow with the International Strategic Studies Association.

December 9, 2004

Australian Navy Prepares for Early Launch of First of 12 All-Aluminum Armidale-class Warships

By Gregory R. Copley, Editor, GIS, in Perth. The first of 12 all-aluminum 56.8m Armidale-class fast patrol vessels for the Royal Australian Navy (RAN) is due to launch at Austal Ships, just south of Fremantle, Western Australia, in mid-December 2004, just eight months after construction began. All 12 of the class will be built within a total construction timeframe of 42 months. The first-of-class, HMAS Armidale, will be commissioned by May 2005.

Prime Minister John Howard, in a visit to the shipyard in September 2004, announced that the RAN would acquire two additional Armidale-class FPBs as follow-on vessels to the initial 12-ship order. The Armidales — essentially a stretched version of the 38m Bay-class Austal design in use (eight vessels) with the Australian Customs Service — replace the 15 Fremantle-class FPBs currently in service.

The new ships are powered by two MTU 16V 4000 M70 diesels, rated at 2,320kW each at 2,000rpm, giving a speed of up to 25 knots. The primary weapon is a single 25mm Rafael Typhoon Mk.25 stabilized gun; the secondary weapons are two 12.7mm M2HB machineguns. The Armidales represent a substantial improvement in capability over the Fremantle-class FPBs, and reinforce the RAN’s capability to undertake coastal patrol and EEZ protection. Australia’s more aggressive prosecution of these missions in the past four years has resulted in a substantial reduction in fisheries poaching — which had been on a massive scale in Australian waters — and the virtual elimination of shipborne illegal immigration in an organized fashion.

Austal, the shipbuilder, on December 9, 2004, also hands over 10 completed 37.5m patrol boats to the Yemen Navy, all built within a 16-month timeframe. These vessels are also based on the Bay-class design.

The shipyard, now the world's premier builder of large aluminum fast ships, has a 101m aluminum catamaran fast Theater Support Vessel — the Westpac Express — on charter through the US Military Sealift Command (MSC) to handle deployments of the US Marine Corps forces based in Okinawa. Austal is also a major contender, in consortium with General Dynamics, for the US Navy’s Littoral Combat Ship (LCS) design.

Significantly, the Croatian Navy — which could host initial deployments of a US LCS — has now also indicated an interest in the Austal Armidale-class FPBs for construction in Croatia.

However, as the RAN substantially upgrades its coastal patrol fleet, its program to build two landing helicopter dock (LHD) ships has slipped, and they are now unlikely to enter service by 2010 as earlier planned. A year delay is likely as the RAN fast-tracks its three-ship program for Air Warfare Destroyers (AWDs) to be built in Australia, to a Spanish design.

There has, however, been a growing groundswell of criticism as to why the AWD hull design had to be imported, when Australian naval architecture has proven so capable. The purchase of the Spanish design may have been a rapid and acceptable solution, but it delayed Australia’s control over its own platform development, and inhibited its ability to enter the export market with its own ships. The potential sale of the Armidale-class FPBs to Croatia and other clients demonstrates the willingness of a number of countries to consider buying warships from Australia, as does the actual sale of the 10 modified Bay-class FPBs to Yemen. Indeed, the potential for follow-on sales to the Yemen Navy is now being explored by Yemen and Australia, and at least one other Persian Gulf state has taken a strong interest in the class since the Yemen Navy sale.

Arguably, the RAN and Australian shipbuilders made the Meko 200 base design from Germany into a very successful warship as the ANZAC-class frigates. But foreign sales, other than to New Zealand, an initial partner in the program, were difficult because the basic hull design remained the property of Blohm & Voss, not of an Australian yard. Australia has the experience and knowledge to design and install complex naval systems aboard ships; that is the difficult part, and it is already a proven Australian capability. Hull design and construction is, in essence, the easy part, but ownership of the platform design gives control of the overall vessel design. In this area, Australia has proven to have innovative hull designers, very capable of thinking “outside the box”, and yet the Royal Australian Navy has proven reluctant to go down this route.

One senior Government official told GIS/Defense & Foreign Affairs Daily: “The RAN has, in many respects, the reverse of a ‘not invented here’ syndrome; if it is invented here it cannot be as good as something invented somewhere else. And after all, the Spanish stopped dominating naval ship design by the time Drake’s more maneuverable designs put paid to the Spanish galleons.”

At the same time, there is considerable anger in some quarters in Australian defense circles that the Australian Government allowed the choice of what is essentially a totally US solution to the new integrated defense system aboard the RAN’s Collins-class submarines (SSKs). Australia and the US in November 2004 signed a memorandum of understanding (MoU) on the joint development, production and support of the Raytheon Integrated Defense Systems AN/BYG-1 Combat Control System (CCS) (formerly referred to as the CCS Mk2 Block 1C Mod 6 Tactical Subsystem). The system is the same as that being installed on the USN’s new Virginia-class attack submarines (SSNs). The MoU in effect is an off-the-shelf purchase, even though some work will be done in Australia. It represents a $75-million buy of none of the systems for the six SSKs (three of systems would be for engineering and test). The systems will be installed from 2006-2010 as the SSKs undergoing routine dockings.

There is the start of a groundswell of support for the concept in Australia that the country needs to return to a degree of defense self-sufficiency, and control over defense industrial programs, rather than merely contributing niche work to foreign programs. As one source said: “We used to design and build the best piston-engine and jet fighters in the world; we controlled our own defense systems. Now, smaller countries, such as Israel and Sweden, sell their systems to us. We need to return to this way of thinking, and begin to the real business of defense self-reliance. We not only have a hollow defense capability in operational terms; we have a hollow defense industrial complex. Both our defense forces and our industry are highly-capable and sophisticated, but we don't give them the tools to do the job and sooner, rather than later, we will pay the price for this. Indeed, we are already doing so.”

March 4, 2004

US-Australia Strategic Relations Described as Critical to Both States

An Australian Parliamentary hearing into US-Australia relations was told that strategic relations between the two states were critical to both sides, but that additional alliances and considerations would increasingly need to be considered by Australia. The testimony by Gregory R. Copley, the President of the International Strategic Studies Association (ISSA) and Editor-in-Chief of Defense & Foreign Affairs publications, was made in the context of his directorship of the Australian strategic think-tank, Future Directions International (FDI).

Mr Copley also noted that Australia was a vital contributor of intelligence and defense capabilities to the US-Australian alliance — formulated through the Australia-New Zealand-US (ANZUS) treaty as well as through the UKUSA Accords — and was not a junior partner in the relationship. Mr Copley also called for steps by the US and Australia to explore ways of reintegrating New Zealand into the partnership as a key to ensuring comprehensive and cost-effective coverage of the Pacific.

The full text of his remarks, entitled Comments Pertinent to the Inquiry Into Australia’s Defence Relations With the United States of America, which were also posted on the website of the Australian Parliament's Joint Standing Committee on Foreign Affairs, Trade & Defence, follow:

1. Introductory Remarks: the Context and Framework of the US-Australia Strategic Relationship

February 2004 marks the 15^th anniversary of the withdrawal of Soviet forces from Afghanistan, a step which presaged the collapse of the Union of Soviet Socialist Republics by only a year or so. The subsequent decade and a half have been marked by profound global strategic change; an era in which pre-existing global or regional security pacts have either been rendered meaningless or subject to substantial reinterpretation. The Warsaw Treaty Organization disappeared completely. The North Atlantic Treaty Organization (NATO), based on the North Atlantic Alliance, became paralyzed, temporarily; was subject to severe distortion in its mis-use in the 1999 “war” against Yugoslavia; and only subsequently has found a new, global mission which extends its military operations as far as Central Asia.

It is entirely appropriate, then, to review the meaning and purpose of the US-Australia strategic relationship which is embodied in and by the Australia-New Zealand-US (ANZUS) Treaty as well as a wide range of other formal and informal aspects. This relationship is arguably the most significant and overriding aspect of Australia’s security for the immediate future, apart from the issue of national self-reliance.

However, the US-Australian relationship is not in itself a comprehensive and total safeguard for Australia’s strategic needs even at this time, and nor is its shape and viability guaranteed in the medium- and long-term.

The relationship is, in fact, approaching a watershed which provides the opportunity for both Australia and the US to re-evaluate and re-energize the Alliance and its objectives.

What is inevitable is that the continued growth of Australia as a strategic power — in the economic, social, political as well as defense sense — will automatically determine that an increasing number of Australian priorities will differ from those of the United States. Inevitably, then, the US-Australian relationship will need to reflect Australia’s autonomous and regional roles just as Australia has historically recognized the reality that the US has strategic priorities elsewhere in the world which do not necessarily or automatically consider Australia.

That in itself does not necessarily mean that the US-Australia defense relationship will diminish. Indeed, it may well expand in some respects, as has been the case since the September 11, 2001, terrorist attacks on the US. The changing realities, however, will determine that the relationship becomes more a matter of partnership, rather than dependence by Australia on the US.

But before that point is reached, it is important to note that — in terms of major defense operational capabilities — Australia has already committed itself for the medium- and possibly longer term to a significant defense technological dependence on the United States which will transcend the lives of the current US and Australian governments and, indeed, their successor governments. In respect of Australian defense independence, it is fair to say that Australia is now more dependent than ever on its relationship with the United States, largely as a result of technology commitments, such as the decision by the Royal Australian Air Force (RAAF) to proceed with the F-35 Joint Strike Fighter (JSF) procurement.[1] This commitment essentially extends aspects of the relationship for at least three more decades from the date of acquisition; in other words to somewhere close to the middle of the 21^st Century.

From the standpoint of historical comparison, it is also fair to note that it was just such a technical choice — the decision in 1963 to purchase the (then) General Dynamics F-111C strike aircraft instead of the British Aircraft Corporation (BAC) TSR.2 — was actually the pivotal mechanism in changing Australia’s principal defense alignment from the United Kingdom to the United States.

By 1963, the ANZUS treaty between Australia, New Zealand and the US was already 12 years old, and yet the treaty signing itself had not caused Australia to move its defense priority from Britain to the US. Rather, the treaty itself became a useful tool when, literally a dozen years after its signing, the Government of Prime Minister Sir Robert Menzies decided that the time was ripe for change, and the F-111 contract became the nexus and visible sign of that change.

The F-111 fleet has been in RAAF service for more than three decades already, and will remain so for several more years, an indication of the length of impact of such decisions, which require constant interaction and a trusted supplier relationship to remain effective.

However, apart from the interaction and relationships built around defence systems decisions, strategic relationships such as ANZUS are essentially political and perceptional. The fact that ANZUS only acquired true strategic impact for Australia when the Government of Sir Robert Menzies reached the conclusion, in 1963, to switch great-power allegiance from the UK to the US, demonstrates the fact that the Alliance itself is only part of the process.

Equally, the reality is that political and perceptional differences between the New Zealand Government of Prime Minister David Lange and the US Administration of President Ronald Reagan in 1985 caused a fissure in ANZUS, effectively removing New Zealand from the Alliance, despite the fact that New Zealand’s function in intelligence collection in South-East Asia and the South Pacific were — at that time — unique and virtually irreplaceable in the short-term. The schism occurred despite the underlying belief by most US and New Zealand thinkers that there was an absolute transparency of mutual support and trust between the two societies, based largely on mutual US-New Zealand commitments to fight together in World War II, Korea and Vietnam. There was, in fact, no such “absolute transparency” of understanding and exchange between the US on the one hand, and Australia and New Zealand on the other, at the time. The fact was that neither the US nor Australian governments comprehended that the demagoguery of a single New Zealand leader could create such a profound strategic disconnect in ANZUS.

Australia was, as a result of Mr Lange’s single-minded anti-US attitude and despite the fact that his approach contradicted all the professional advise given to him by most of his Cabinet and defence advisors, forced to assume the very real burden of ensuring that the loss of New Zealand-provided intelligence to the ANZUS alliance — and to the UKUSA Accords intelligence process — did not allow serious gaps to occur in the Alliance readiness. This, however, was at some cost to Australia, and allowed the US to proceed with the strategic abandonment of New Zealand without further thought.[2]

The true cost of that political/perceptional mis-step by New Zealand — because of Mr Lange’s behaviour — has only become apparent with the passing of almost two decades: New Zealand’s entire political process turned essentially inward and isolationist, and the wealth of New Zealand’s contribution to stability and shared strategic projection in the South Pacific was consistently reduced. This has, in the view of this analyst, had a long-term deleterious affect on New Zealand’s economic wealth, its political influence and strategic viability. During the same period, Australia has grown significantly in terms of global strategic influence, both because of its world-class defence and intelligence capabilities and because of its political-economic growth, despite the fact that other regional states have themselves grown substantially in terms of their own defence/strategic capabilities.

Australia, at all stages of the ANZUS Treaty’s life, has had, de facto, greater influence in Washington than has New Zealand, largely as a function of its greater geographic, geopolitical, population and economic scope than New Zealand, so it must be assumed that any disruption in the Australia-US relationship at a political/perceptional level would be treated with far greater urgency and depth than occurred with the US-NZ schism of 1985.

It would, however, be a mistake to believe that this is a universal truth which would apply to all US administrations. The scope exists for diminished or changed US belief in the importance of the US-Australia relationship [that is, a change from the mutual security-oriented nature of the Alliance at present and for most of ANZUS’ existence], something which was demonstrated during the US Presidency of Jimmy Carter (1977-1981) and the Presidency of William Clinton (1993-2001).

It should also be stressed that while political/perceptional fluctuations have existed at the leadership and public levels of the US commitment to Australia, strategically, there has been a fairly uniform belief (and commitment) at middle-level ranks of the US Armed Forces and Department of Defense (DoD) in the value of the US-Australian defence relationship. This level of the bilateral relationship has also been the easiest for Australian officials to access and maintain. As a result, Australian officials have placed their greatest emphasis on these “working level” relationships. And this in turn has resulted in very successful teaming of US and Australian defence and defence intelligence capabilities, earning Australia and Australian defence and intelligence personnel enormous respect among their US counterparts.

In essence, because this aspect of the US-Australia defence relationship has proven so successful and practical, Australia has neglected almost entirely until this point in ensuring the success of the relationship at a Cabinet and Head-of-State level. This has meant that, regardless of the constancy of the Australian commitment and contribution to the Alliance, there have been significant periods (1977-81 and 1993-2001) when Australia’s larger strategic interests and voice have been ignored in Washington. These periods represent significant gaps in opportunities for Australian strategic progress and engagement in world affairs and periods of missed economic opportunities.

Even during periods when Australia’s commitment, constancy and capability have been appreciated, such as during the Reagan era (1981-1989), they have been undervalued, largely because of Washington’s preoccupation with other arenas. However, during the Carter Administration era, it is also fair to say that Australia’s commitment was also to an extent ignored because of US perceptions that Australian security had been compromised by Soviet penetration. And this meant that — despite the UKUSA Accords on intelligence sharing between Australia, Canada, the UK and US — Australia was not trusted with key intelligence and policy planning access by Washington, and Canberra was not fully aware or informed of this unilateral abrogation of the relationship by the US.

The US-Australia strategic and defense alliance, therefore, has been asymmetric: it has, naturally, been regarded as more important by Australia than by the US, largely because for Australia the Alliance is its paramount strategic policy constant. For the US, the ANZUS Alliance represents only one of a number of such alliances worldwide.

Two factors have assisted in starting to partially break the asymmetric nature of the US-Australia security relationship:

1. The September 11, 2001, terrorist attacks on the US, leading to the “war on terror” and the Coalition war against Iraqi Pres. Saddam Hussein, and the shared perception of a terrorist/radical threat to mutual interests which became inconized by the al-Qaida terrorist attack in Bali; and
2. The shared US-Australian perception that nuclear weapons, delivered by long-range ballistic missiles, represented a potentially hostile capability which could threaten both Australia and the US from a variety states, both currently and potentially.[3]

The speed and capability of the Australian responses to mutually-perceived threats and needs in the “war on terror” and then in Iraq were so significant that — especially in the climate of international isolation which surrounded initial US decisions to react in Afghanistan and Iraq — Australia’s contribution became politically as well as militarily significant to Washington. This provided a window of unique access for the Australian Government to elevate the nature of the ANZUS relationship from wholly asymmetric to something resembling a partnership of equals.

This access has been only partially exploited by the Australian Government, which continues to function largely on the basis of its established bureaucratic links rather than on firmly embedding the bilateral security relationship at all levels of the political and governmental process in the US. However, a start has been made on elevating the ANZUS relationship to a point where Australia can make major strategic gains from it.

What remains an open question at this point is how this nascent opening in the relationship will progress, or regress, following elections in late 2004 in both Australia and the US. Clearly, given the history of the relationship since 2001, the return to office of both incumbent leaderships would enable the progress — which was begun on the basis of mutually-perceived conditions — to continue. However, it is clear that changes in the governments of either or both states in late 2004 — based on the known and presently-possible alternatives to both the administrations of George W. Bush and John Howard — will mean a period of pause, re-evaluation and almost certain change in the nature and direction of the bilateral relationship.

Without even considering the qualities and values of potentially new administrations in either countries, such an hiatus is inevitable, based on the fact that the alternate leadership in Australia, and all of the known alternate candidates for the US Presidency, represent such a radical departures from the current leaderships. However, it is at this point that the strength of the middle-level relationships which have embodied the working nature of the US-Australia bilateral defense relationship will be effective in safeguarding at least an ongoing constancy at operational levels of the ANZUS Alliance.

However, total reliance on operational, middle-level relationships does not progress the overarching strategic potential of the Alliance.

The Australian Government, at political and Defence/Armed Services levels, has consistently missed the opportunities available to it to advance the Alliance so that it is seen in Washington at the highest levels as one of the most strategically-important relationships of the United States, not just of Australia. By focusing virtually exclusively on bureaucratic relationships with either US career civil servants, uniformed personnel and appointed officials, Australia has missed its opportunities to take full advantage of the broader spectrum of official and unofficial assets which influence and sustain policy directions in the United States. Apart from Administration assets (White House, National Security Council, Department of State, Department of Defense and the Intelligence Community), there are two major areas where policy is effectively made or governed and where it is conceived and influenced:

The US Congress and particularly its committees; and
The non-governmental strategic policy community.

The unity of policy formulation and budget control within the Australian governmental system is not mirrored in the United States. And in the US, Congress strenuously guards its privilege and power, through its standing committees and subcommittees, to shape defense and strategic policy formulation and to govern scrupulously how it is administered through its control of two key elements:

Budget, and the line-item control over funding for, and progress of, specific defense (and other governmental) programs and conflict engagement; and
Promotions of uniformed flag/field rank officers and key levels of appointed bureaucrats, including all ambassadorial appointments.

Australian diplomatic and Defence/Armed Services personnel, by insisting on virtually only sustaining working-level relationships with their career or uniformed counterparts in the US, have consistently rejected the opportunities to embrace relationships with either Congress (on a meaningful and ongoing basis) or with the highly-professional and well-connected non-governmental policy networks which pervade Washington. There has been a willful neglect by Australian officials — based on prejudices developed from the way policy is formulated in Canberra — to understand how defense and strategic policy is shaped in the United States. Even when Washington “think tanks” are engaged by the Australian diplomatic or defense process, they are not effectively or necessarily wisely engaged: there is little understanding of which institutions can help with which tasks.

By failing to embrace and systematically address the overall complexity of the US strategic policy arena — which includes the Congress as a priority of equal stature to the White House; the “educational” base which includes “think tanks”; the media at many levels; as well as the Administrative labyrinth of defense and intelligence offices — the Australian strategic community fails to adequately command US priorities. Equally, Australian leadership, if it is to improve the benefits to Australia, needs to elevate the defense relationship with the US to a level of constant dialogue between heads-of-government — as is the case between, say, the US and the UK — in the knowledge that all other forms of political and economic bilateral benefit will flourish beneath this umbrella.

Evidence of the value of this approach has been seen in US-Australian strategic relations since September 11, 2001, when the Australian Government and Prime Minister Howard have attempted to compound and capitalize the impact of the profound and recent US-Australian defense cooperation in Afghanistan, East Timor and Iraq. But these Australian attempts to expand upon the new-found recognition of Australia’s value as an ally were undertaken essentially as ad hoc responses. The US recognition of Australia’s roles in Afghanistan, Iraq and East Timor should have been a signal for Australia to re-examine the methodology, as well as the objectives, of the Australia-US defense relationship.

It is timely and significant, therefore, that the Defence Sub-Committee of the Joint Standing Committee on Foreign Affairs, Defence and Trade of the Parliament of Australia has taken this initiative to examine Australia’s Defence Relations With the United States.

2. The Applicability of the ANZUS Treaty to Australia’s Defence and Security

It is significant that there is no structural alternative at present, for either Australia or the United States, to the ANZUS Treaty if the security interests of both countries are to be comprehensively met. ANZUS is not a treaty which merely benefits Australia and provides it with a security guarantee. Rather, it provides both signatories — in this discussion, Australia and the US; New Zealand’s needs and contributions aside for the moment — with different aspects of their needs.

Significant security pressures on the United States and very real pressures on the US Armed Forces since September 11, 2001, were eased by the availability and commitment of Australian forces. In real, operational terms, Australian technological and equipment resources as well as force structures and — most importantly — military skills provided a critical edge to US-led military efforts in the 2001-2004 timeframe, on a scale rarely seen before. Perhaps only the reliance by the US World War II Theater Commander, Gen. Douglas MacArthur, on Australian commanders and complete Australian military formations, particularly at the early stages of US engagement in that war, parallels the level of US reliance on Australia for defense purposes seen in the 2001-2004 timeframe.

Indeed, in the Afghanistan and Iraq engagements of the 2001-2004 timeframe, Australia’s commitment of ground, naval and air forces in many areas routinely exceeded the quality and effectiveness of comparable US forces. This was a direct result of Australia’s development of highly-professional military skills, coupled with a force structure which balances high-technology with practicality and which is compatible, operationally, with US and NATO forces.

Quite apart from the high value obtained from the relatively small numbers of Australian personnel in Afghanistan, Iraq and East Timor, the significant contribution of Australian submarine patrol capabilities to the overall ANZUS requirement has been disproportionately high, and recognized as such by the US Navy. The same applies to ongoing Australian contributions to alliance-wide intelligence requirements [discussed below].

What has been significant since September 11, 2001, is that there was widespread recognition by the US leadership as well as the military of Australia’s value, and value-added, as a defense and strategic partner. This has changed, to some extent, the nature of the ANZUS Treaty to one of perceived higher value to the US. However, given the changing and diverse nature of strategic pressures facing the US leadership — in the White House, Congress and Administration — some of the perceived value and importance of the ANZUS Treaty has already begun to waste away at political levels.

In viewing the applicability of ANZUS to the future security and defense of Australia, however, it is important to understand that the third leg of the treaty — NZ — has, since 1985, been inoperative. This, then, begs the question as to whether ANZUS should be replaced by a new A-US treaty, or whether the New Zealand aspect of it should be revived.

At face value, the restoration of New Zealand’s role in ANZUS is of greater concern to Australia than to the US, although the substantially increased burden of South Pacific defense responsibilities for Australia eventually impacts on how much capability Australia can deliver to the Alliance. This becomes especially true as physical demands on the Australian defense structure move more to the north and west to safeguard vital resource, sea-lane and littoral assets in the Middle East and Africa, South and Central Asia and South-East Asia.

It becomes a prima facie argument, therefore, that the re-inclusion of New Zealand as an effective partner in ANZUS would provide substantial relief to the Australian and US defence burdens (in economic as well as practical terms), while adding qualitatively to the mission of South Pacific peacekeeping, surveillance and security. Equally, from an overarching strategic standpoint, the return of New Zealand to full partnership in ANZUS would begin to deliver political and economic benefits to New Zealand. This would then substantially contribute to Australian security as well as to Australasian economic and social vitality.

New Zealand’s restoration to full ANZUS partnership is therefore seen as a significant goal for Australia, but one which has not been addressed in recent years because of two main reasons:

The US has not yet been sufficiently pressed, at the highest levels, to see the value of resolving its differences with New Zealand and many US Defense officials remain skeptical of New Zealand’s reliability as a partner; and
New Zealand’s politicians and public felt empowered by the 1985 snub of the US, and have yet to realise the economic cost which the gesture — and the subsequent isolationist and disarmament policies — has had for the country.

It therefore remains Australia’s burden — as New Zealand’s closest ally and partner — to begin the process of rebuilding the relationship. Australia has, since 1985, been the conciliator between the US and New Zealand, to the point where some New Zealand officials now believe that the problem has been resolved (it has not) and where some US officials also believe that the problem is not worth reconsidering. The issue is therefore moribund, and requires a plan which could, through cautious confidence-building measures coupled with extremely careful public diplomacy steps, re-ignite the relationship. Australia’s diplomacy, therefore, would need to be equally vigorous and sensitive with both the US and New Zealand, and would require both to put past attitudes aside. And in the case of New Zealand, careful rewording of legislation would also be required, perhaps compensated by some US gestures.

Given that Australia has now recommitted to the US defence relationship by its purchase of, among other things, the F-35 fighter, and given that, in any event, the US strategic stature as the dominant world military power will require Australia’s attention and friendship for the next decade (and possibly much longer), it must be construed that ANZUS remains a core of Australia’s defence and security thinking. That does not imply that all other existing and potential security treaties and approaches must be ignored, or even be subordinate to ANZUS. Quite the contrary: the fluid strategic environment of the coming decade will dictate that ANZUS must be a flexible instrument.

As with the instance of New Zealand participation in ANZUS, once again, it would be timely for Australia to consider a re-evaluation of the Treaty with a view to adding detail and depth to it, within the constraint that the Treaty be viewed as a flexible, living instrument. This could, and possibly should, include a plan to embrace Australia’s allies in the Pacific into ANZUS, possibly under Australia’s umbrella, coincident with the evolution of the cohesive regional community proposed by an Australian Senate paper of August 2003.[4]

The ANZUS Treaty, in summary, remains relevant for Australian strategic interests, but requires re-examination in the light of New Zealand’s situation and evolving global trends, some of which are discussed below. In essence, the concept of re-engaging New Zealand, coupled with the energizing of the South Pacific bloc as part of the ANZUS family, offers an opportunity for the treaty to become geopolitically more relevant and effective, while helping to broaden regional prosperity and mutual interests.

This will become more relevant both to Australia and to the US as the People’s Republic of China (PRC) assumes a greater strategic role in East Asia and as the US-Japan treaty relationship develops to see Japan assume a more autonomous defense rôle. The same prospect applies to the Republic of Korea (RoK), assuming a continuation and eventual success of the move toward resolution of Korean Peninsula tensions. There are also reasons to believe that the PRC relationship with or toward Taiwan (Republic of China: ROC) can also be effectively managed without conflict.

All of these developments may necessitate a new set of Australian treaties or strategies, independent of ANZUS, which consider Australian requirements in East Asia. Similarly, ANZUS was not created specifically to consider the emergence of South Asian and South-East Asian states as Australian strategic priorities, and the emergence of India as a great power — similar to the emergence of the PRC — requires separate thinking, some of which needs to be reflected in Australia’s engagement within ANZUS. Equally, it will require consideration of separate Australian strategies and possibly treaties.

In essence, ANZUS was considered originally in the light of the Cold War and the US-Australian perceived requirements to act within a Pacific and East/South-East Asian context. The Treaty, however, has proven flexible enough to consider the post-Cold War world, but now needs re-examination in light of Australia’s likely need to develop companion, but independent strategies and modus vivendi to cope with other challenges and alliances.

ANZUS, therefore, will move eventually from being the sole overriding strategic treaty — without discounting other arrangements such as the Five-Power Treaty Arrangements and ANZUK, etc. — to being the major treaty among a balanced set of treaties which safeguard Australia’s interests.

3. The Value of US-Australian Intelligence Sharing

While it could be argued that the superpower — and global — status of the United States dominates the defense aspect of the partnership between Australia and the US, it is far less clear that the US dominates, from the standpoint of value, in the area of intelligence-sharing within the Alliance. The US, with its space dominance, has greater resources to contribute in the area of technical intelligence collection (SIGINT, PHOTINT, COMINT, etc.) — intercepts and overhead imagery in particular — and this dominates both the volume of output and budgets.

But within the South Pacific, South-East Asian and East Asian regions — and possibly much of the littoral of the Indian Ocean — it is Australia which has a significant volume and quality of intelligence to contribute to the Alliance, both of a technical nature and particularly, but more importantly from Australian human intelligence (HUMINT) sources and analytical capability.

Indeed, the sheer volume of US-supplied technical intelligence product and imagery holds the potential to distort balanced Australian policymaking because it lacks a balance of contextual input from well-established HUMINT sources and contextual analysis. The lessons of US intelligence relating to the build-up and cassus belli for the 2003 Coalition war against Iraq should be of salutary importance when considering the value of the US contribution to US-Australian intelligence sharing. Given the overwhelming nature of intelligence which was available[5] to justify the cassus belli, what was significant was that the US intelligence community failed to comprehend, coordinate and present that material in the form of assessments which could have significantly assisted the political and military prosecution of the war. This was largely attributable to the lack of historic continuity in US HUMINT and the function of related experience in developing assessments.

The US has, in the late- and post-Cold War periods, addressed emerging crises on an ad hoc basis, throwing intelligence resources at problems as they arise, without regard to the necessity for a pre-existing basis of cultural and political context to shape policy before action is engaged. This is an expensive approach to policy, triggering as it does high-cost responses before adequate understanding of the problem is reached, based on sound context-based analysis.

What recent history has demonstrated is that technical intelligence and overhead imagery is critical in warfighting, and therefore the US capability is invaluable to Australian defense capabilities when the US and Australia are engaged in coalition military activities. Equally, however, HUMINT has been vindicated as a critical element of defense and strategic warning capability, and in this regard, Australia’s continuity of capability is critical to both Australia and the US. As well, Australia’s battlefield, tactical reconnaissance capability has proven superior to that of almost all other military forces, something which was demonstrated effectively during post 9/11 operations in Afghanistan and during the 2003 conflict in Iraq.

The US has consistently underplayed its deficiencies in many areas of intelligence collection and interpretation and, indeed, appears to refuse to accept that such deficiencies exist. The failings of US intelligence capabilities — particularly in areas of HUMINT and the ability to assess intelligence within broader geographic, cultural and historic contexts — can have profound disadvantages for US alliance partners such as Australia.

In summary, while Australia benefits significantly from the global technical collection capability of the United States in the intelligence arena, Australia has significant intelligence capabilities and experience of its own at both a collection level, in terms of tactical military capability, and at an analytical and interpretive level. There is, however, little evidence that Australia has developed the confidence in its own capacity to undertake global strategic assessments to the degree required of a nation entering the realms of middle power status. There is an evident need to broaden debate and expertise outside the narrowest realms of classified analysis in Australia, and an increased willingness for analysts and collectors in the classified or “black” arena to understand that — particularly in the modern information environment — they do not necessarily hold all of the keys to balanced final intelligence product.

Having said that, the lack of independent analytical capability in Australia, in terms of strategic intelligence assessments, has only now begun to be addressed.

Even with this shortcoming, which applies largely to providing the Australian Government with independent, world-class support for policymaking, Australia’s intelligence contribution to the Alliance — and, indeed, to the entire UKUSA Accords framework — remains extremely strong and professional. Australia needs to promote this contribution, and even high potential contribution, to a greater degree at the highest levels of the relationship.

4. The Role and Engagement of the US in the Asia-Pacific Region

It is clear that the nature of the US engagement in the Asia-Pacific region has changed substantially during the half-century of the ANZUS Alliance, and is now changing still further. The key factors governing the US posture in the Asia-Pacific region for the coming decade centre around:

The growth — and increasing sophistication — of the People’s Republic of China (PRC) as a major economic, political and military power in the region;
The potential for resolution or transformation — either through evolutionary politics or conflict — of the Korean Peninsula state of war;
The development of regional capacities for the refinement of threats related to ballistic missiles and nuclear warheads (principally by the PRC and DPRK, but also by India and potentially the ROC: Taiwan), as well, in response, as the US-led developments of technologies — principally anti-ballistic missile (ABM) systems — to counter the threats at an operational level, and strategic actions to force constraint at other levels;
The development of increasing strategic autonomy by Japan from the post-World War II attitudes and perceptions;
The ongoing need of the US, as a global power, to sustain a physical presence in the Asia-Pacific region, as well as the Indian Ocean region, simply to safeguard and project US economic interests;
The development of Central Asia as a new area of US energy dominance, with attendant military-strategic implications for the PRC, Russia, the Arabian Peninsula and Persian Gulf states, Red Sea/Suez sea lanes of communications (SLOCs) linking with Asia-Pacific SLOCs, and so on.

The implication of almost all of the trends in the region is for a different set of US force deployment responses in East Asia and the Western Pacific, and into the Indian Ocean, than have existed through the latter part of the 20^th Century. Changes will occur as to the size of deployments, depending primarily on whether or not the Korean Peninsula situation moves toward conflict and whether or not the PRC moves toward a military resolution of its confrontation with Taiwan/ROC. In the event that the Korean and Taiwan situations continue to move toward possible non-military solutions, changes in US deployments and operational mode will occur more qualitatively because of the need to deploy smaller force structures more flexibly.

Substantial changes already occurred in the mode of deployment of US forces in the Republic of Korea in 2003, partly as a response to the Minju Dang (Millennium Democratic Party: MD) candidate Roh Moo-hyun, 56, who won the December 19, 2002, Presidential election on the basis of a continued engagement of the DPRK and criticism of the US hard line against the Pyongyang Government. The approach of Pres. Roh’s Government led the US George W. Bush Administration to take the US 2^nd Division out of the direct line-of-fire along the Demilitarised Zone (DMZ) and force the ROK Armed Forces to take the initial brunt of any prospective DPRK attack. This forced the ROK to rely less on the US to suffer the major consequences of a surprise DPRK attack, while at the same time giving the US far greater strategic military depth and flexibility in any possible conflict with the DPRK.

This significant change in US military deployment in South Korea — described here simplistically — significantly altered the nature of possible warfighting on the Korean Peninsula and the way the US viewed its military options in the area. Similarly, the Bush Administration process of strenuous engagement of the DPRK leadership indicated that the US was not moving forward on the basis of a perpetuation of the status quo ante on the Peninsula.

This reflected not only the reality that the DPRK Administration of Kim Jong-Il was reaching possibly its most unstable point, but also reflected the changing — and yet divided — approach of the PRC toward the DPRK (with part of the People’s Liberation Army leadership supporting the DPRK, and part working toward a peaceful transformation of the situation in North Korea). As well, the new US approach showed a recognition of the inevitability of a reduction and eventual removal of US forces from the Korean Peninsula, either through conflict or political evolution. But it also reflected the reality that the stability, size and options available for US force deployment in Japanese territory are also changing and will eventually lead to a US withdrawal of some or all of the existing US force structure there.

The PRC leadership knows that any Korean or Taiwan-related conflict would prolong the US East Asian deployments, which inclines the dominant elements in Beijing (including former Pres. Jiang Zemin, Chairman of the Central Military Commission) toward policies which help facilitate the US withdrawal. Diminished US military presence in East Asia increases PRC options to exercise regional authority. The question remains as to whether competing elements in the PRC leadership will have the patience to see a strategy of restraint pay dividends for Beijing. [As a related observation, it is worth noting the fact that the PRC leadership has accepted with remarkable equanimity the deployment of US, Australian, European and Russian military deployments into Central Asia, ostensibly to wage the “war on terror”, but which also place a new and significant potential military challenge on its Western frontier. Many Chinese analysts believe that this deployment of potentially hostile forces was designed to balance any possible PRC move to act aggressively against Taiwan; even so, the PRC engaged with, rather than against, the states combating terrorism, and this response, perhaps more than any other, was a watershed in US-PRC strategic relations.]

The process of strategic transformation in the East Asia/Western Pacific region — including the gradual realignment of the US-Japan strategic relationship — will take place over the coming two decades or so, but many changes will occur in US force capabilities in the region within that time.

In a significant review of the US-Japan alliance published in January 2004, US Lieutenant-Colonel (P) William E. Rapp noted:

“Japan is risk-averse, but increasingly self-aware, dramatic (in Japanese terms) security policy changes will continue to be made in small, but cumulative steps. These changes in security policy and public acquiescence to them will create pressure on the alliance to reduce asymmetries and offensive burdens since the ideal, long-term security future for Japan does not rely on the current role vis-à-vis the United States. Both Japan and the United States must move out of their comfort zones to create a more balanced relationship that involves substantial consultation and policy accommodation, a greater risk-taking Japanese role in the maintenance of peace and stability of the region, and coordinated action to resolve conflicts and promote prosperity in the region.”

“Because neither country has a viable alternative to the alliance for the promotion of security and national interests in the region, especially given the uncertainties of the future trends in China and the Korean Peninsula, for the next couple of decades the alliance will remain central to achieving the interests of both Japan and the United States. A more symmetrical alliance can be a positive force for regional stability and prosperity in areas of engagement of China, proactive shaping of the security environment, the protection of maritime commerce routes, and the countering of weapons proliferation, terrorism, and drug trafficking. Without substantive change, though, the centrality of the alliance will diminish as strategic alternatives develop for either the United States or Japan.”[6]

Both Japan and the US have clearly been probing new defence options in Asia and the Pacific to achieve their strategic objectives. The US interests in Asia are now more diffuse than they were for much of the post-World War II era: the US must focus strongly on current or potential operational requirements built around potential operations related to Korea, Taiwan and Afghanistan, along with instabilities in Indonesia and the South China Sea (Spratlys). For the first time, developments after September 11, 2001, necessitated that the US for the first time truly see the Pacific and Indian Ocean theatres as being integral, and yet without the same fixed basing which had been available during the Cold War. As well, US budgets are now more constrained than in the past: airlift is severely challenged within the US force structure, as is aerial refueling capacity.

Inevitably, the US must rely more on strategic partnerships throughout the regions, and these relationships must vary in their nature given the challenges and resources available.

This does not mean that the US will — or can — forsake traditional basing requirements. The steady reconstruction of capability for US deployment through Guam is symptomatic of the reality that the US will not let its relationships with its Pacific microstates wither in the near future. As well, the US requirement to develop terrestrially-based anti-ballistic missile (ABM) capabilities means that US use of facilities in the Marshall Islands will also continue into the foreseeable future, regardless of developments in the Compact of Free Association between the US and Marshalls.

Nonetheless, constraints on US forces and budgets will mean that the US will increasingly need to rely on Australian force capabilities to meet mutual strategic goals, particularly in the Indian Ocean and South-East Asia. The US reliance on Australian defence capabilities in the post September 11, 2001, period seems unlikely to diminish except in the event that the US unilaterally abandons its “war on terror” and its commitment to developing and furthering its energy and strategic interests in Central Asia and its need to maintain at least a degree of partnership with Indian defence forces.

In light of the recent focus on Indian Ocean deployments and crises best addressed from the Indian Ocean, the decision of the Australian Government in the mid-1980s to move some 50 percent of Royal Australian Navy basing to Western Australia now seems insightful and provident.

In summary, US defence strategies and deployments in the Asia-Pacific region — including, by association, the Indian Ocean and Central Asia — will become increasingly constrained by budgets and existing capabilities. This has been recognised within the current phase of US defence restructuring. It was revealed at the beginning of February 2004 that US Defense Secretary Donald Rumsfeld was planning a “sweeping revision” of the US command apparatus throughout Asia and the Pacific, a region which draws on a force of some 300,000 US service personnel: the largest combatant command in the US Defense forces.

Among the command elements likely to be dismantled in the Republic of Korea are: the United Nations Command (UNC), US Forces Korea (USFK), Combined Forces Command (CFC) and the Eighth US Army. This would remove one US four-star billet, but a new four-star Army slot would be the Command of US Army forces Pacific, based at Ft. Shafter, Hawaii, currently a three-star slot.

In Japan, it was expected that the United States Forces Japan (USFJ) command would be abolished and be replaced by an operational corps headquarters under a lieutenant-general.

US Pacific Command spokesman Capt. (USN) John Singley said:

“The Pacific Command is currently reviewing plans to strengthen our defence posture as part of a larger US Government global effort in that regard. We are currently consulting with our allies and partners in the region and will continue to do so before any decisions are made.”

“Some of these plans are near-term. Others are further in the future. The aim of the global posture review is to strengthen our defense relationships with key allies and partners, improve flexibility, enable action regionally and globally, exploit advantages in rapid power projection, and focus on overall capabilities instead of numbers.”[7]

The US and ROK governments had already announced in 2003 that the US HQ in Korea would move from the Seoul area to a new site some 75 miles south, along with the move of the US 2^nd Div., noted above. At the same time, the US made it clear that it was moving to smaller, more flexible ground force structures, effectively making the brigade, rather than the division the principal unit of ground force maneuver in future conflict. This Army restructuring was less significant to US-Australian defence relations in terms of the Pacific, but will obviously be of critical importance to future US-Australian joint operations in any area of the world.

5. The Adaptability and Interoperability of Australia’s Force Structure and Capability for Coalition Operations

The lessons of military operations in Afghanistan, but more importantly in Iraq during 2003, provided the governing criteria for US force restructuring. In this regard, the high “return on investment” of relatively small unit operations by Australian, British and Polish forces during the 2003 Gulf War II combat clearly made an impression on the US plans to re-think future force structures.

Australia has faced defense budget and manpower constraints for a longer period than the
US and has been forced to make small unit operations the basis for its defense projection. In essence, the brigade has been the major ground force unit of the Australian Army for some time, paying only theoretical regard to the division as a unit of maneuver only in a major war.

Australian forces have had sufficient experience in recent conflicts — including Gulf War I in 1991 and the later engagements in Afghanistan and Gulf War II, as well as East Timor — to know that Australian Army, Navy and Air Force elements have greater flexibility than most forces in the world, and, at the same time, sufficient experience to ensure that they are essentially interoperable with US and other NATO forces, as well as those of South-East Asian states.

This flexibility and interoperability is a product of experience. By comparison, the performance of the Argentine Air Force during the Falklands war of 1982 was exemplary, albeit constrained by inferior equipment. This capability was a direct result of the regular exercises conducted between Argentine and US air forces. On the other hand, the performance of the Argentine Army and Navy were poor in almost all senses, largely because they had little experience on which to base any of their actions — resulting in poor equipment choices, among other things — and virtually no experience at exercising with foreign powers.

This does not mean that Australian defense planners can rest on their laurels. However, in the areas of interoperability and flexibility, Australian forces are an example to the rest of the world. Ideally, while it is critical to continue to learn lessons from failures in conflict, it is equally important that Australian defense analysts begin the process of learning from and codifying for future use the successes of Australian forces in recent and current conflicts.

6. The Implications of Australia’s Dialogue With the US on Missile Defence

The underlying principle of the current work on missile defense in the US, Israel, Europe, Japan and other states is that nuclear weapons proliferation, coupled with the development of longer-range ballistic missiles, already poses a threat to the stability of the international environment. The response to that nuclear weapon/ballistic missile threat is seen to be in the form of surface-based anti-ballistic missiles (ABMs).

Arguably, the missile defense theories currently being espoused — and being codified in actual ABM systems — revolve around the creation of highly-expensive and complex weapons systems to defeat the relatively primitive (but massive) threat posed by the ballistic missiles and their nuclear warheads. The threats presented are largely counter-city threats, rather than counter-force. As presently structured, most current and foreseeable threats in this regard are not, for the most part, from weapons which could be described as “war-winning”. Rather, they are designed largely to be systems of blackmail and political coercion, or, at best, “defeat-avoiding”.

In the case of the DPRK, Iran, Iraq and Libya, for example, the concept of creating viable ballistic missile forces along with nuclear or biological warheads was designed to give the holders the ability to withstand attack or pressure from the US or other external forces. The DPRK and Iran leaderships have, in particular, indicated that they have felt that the survival of DPRK leader Kim Jong-Il to this point was solely based on the belief abroad that North Korea had a capability to defend itself with nuclear weapons (albeit a capability which was never publicly accepted by the US, but which was widely believed to be the case for some years).

The reality has been, for some years, that technologies exist which can detect ballistic missile launches in real-time anywhere in the world. As well, it has been theoretically possible for some years to create space-based, energy-derived ABM systems which could automatically track and destroy ballistic missiles at apogee. This concept was to have been developed into reality under the US Reagan Administration’s Strategic Defense Initiative (SDI). Instead, political opposition — led largely by the Soviet Union’s support mechanisms in the West — meant that SDI was abandoned when Pres. Ronald Reagan left office. Incoming Pres. George H. W. Bush transformed SDI into a far more expensive terrestrially-based approach, based on existing technologies, removing it from being an internationally-controlled system to an ABM system which defended only sovereign targets against limited ballistic missile attack.

Given the momentum of the work, the Clinton Administration which replaced the Bush 1 Administration merely continued the momentum of the ABM programs at a limited level.

What this political curbing of SDI achieved was the lengthening of the life of antiquated and obsolescent weapons systems — long-range ballistic missiles with nuclear or biological warheads — when they could already have been eliminated.

The reality is, however, that effective neutralization of the ballistic missile/nuclear weapons threat has not yet occurred, and the ballistic missiles of the PRC, DPRK and India pose capabilities which Australia must recognize for at least the coming decade or two.

The implications of Australia’s dialogue with the US on cooperation in ABM programs primarily include the opportunity that Australia should be able to develop the technical understandings to create credible strategies and policies for defense against potential missile/nuclear threats to Australia. Developments of the post-Cold War era meant that the threat of nuclear weapons has moved from the essentially East-West mutually assured destruction (MAD) scenario which held NATO states and Warsaw Treaty states hostage, to an era in which the threat of nuclear attack has become more fluid and unstable, and more possibly directed to targets outside the NATO or Eastern bloc, however unlikely such an attack might be.

As well, Australian engagement with the US on this issue allows Australian science and industry the opportunity to participate in research and manufacture at levels previously not addressed. At the same time, Australian technologies, such as those developed for the Jindalee OTHR program may well offer innovative contributions to US and international thinking in the ABM field.

7. Concluding Points

7.1. In the absence of a major strategic watershed — which could include ideological shifts in either the US or Australian leaderships — the US-Australia strategic relationship is likely to remain the most significant single element of Australia’s global national security framework for the foreseeable future. In this regard, technical or capability-related elements of the relationship will for the next several decades be a significant underpinning of the partnership, quite apart from the current (and foreseeable) ideological and societal links between the US and Australia. In other words, the defense procurement decisions made by Australia, favoring US suppliers of main weapons systems such as the F-35 Joint Strike Fighter, will force Australia to adhere to a relationship with the US even when political pressures work against the relationship from time to time.

7.2. Australia, as a trusted ally and strategic partner, is highly-regarded by US officials at all levels. However, in the bilateral defense relationship, Australian Government officials — elected and appointed, uniformed and civilian — have almost totally allowed themselves to be “channeled” into working relationships at junior- to mid-levels of the US Administration and Armed Forces.[8] Australia has failed to adequately engage the broader sector of influences on US strategic policymaking, preferring the safer route of dealing almost totally within the framework of “government official to government official”. This completely misunderstands how the US system works. As a result, Australia has not fully engaged the US Congress nor the highest levels of the US Administration, despite the warm expressions of friendship which accompany meetings at head-of-state or cabinet/sub-cabinet levels. Thus the value of Australia’s invaluable contributions to the Alliance in intelligence, defense and geopolitical terms are not sufficiently appreciated in Canberra. It is imperative for Australia’s continued growth as a strategic middle power and partner — not a junior partner — in the Alliance that this situation be redressed. Moreover, it is important that the situation be reviewed in light of the reality that more informal, and often non-governmental linkages be pursued than has been the case in the past. Equally, the question must be asked whether, because of existing attitudes and thinking, the Australian defence community is equipped at this stage to be able to assess how such changes or additions should be made to Australia’s approach to upgrading engagement with the US. This is not to denigrate in any way the exceptional professionalism of Australian officers and officials; rather, in some respects, they are too formal and direct in their relationships to consider the almost anarchic approaches to policymaking in the multi-polar Washington morass. But fundamental to this is the understanding that Australia makes a contribution of increasing value to the bilateral security relationship, but has yet to receive adequate US recognition or reward for this growing role.

7.3. The ongoing schism between New Zealand and the United States within the context of the ANZUS Alliances has placed an undue burden on Australia’s defense and financial resources. As well, the absence of New Zealand from the Alliance means that the potential of ANZUS to fulfill its potential for the protection of the geopolitical regions — which link the US through the Pacific with Australia to the Indian Ocean — is limited. This in turn inhibits the strategic growth potential for the three original ANZUS signatories, and particularly the economic continuity which such an alliance should bring. As a result, a major priority for Australia, which has borne most of the increased defence burden since 1985, should be to assist in repairing the New Zealand rift with ANZUS. This may take extraordinary diplomatic efforts by Canberra with both Wellington and Washington, using the highest levels of Australian authority. However, the cost-security benefits which could accrue could make this of prime strategic importance to Australia in the long-term.

7.4. Australia’s commitment as a partner to both the F-35 Joint Strike Fighter and ballistic missile defense programs led by the US offer significant opportunities for Australia to participate in defense industrial opportunities at the highest technological levels. As well, they offer Australia the opportunity to participate in the planning and contextual thinking — such as threat considerations and the like — behind the programs. However, the increasing tendency to involve Australian defense industrial capability only as subordinate partners in major US or European programs has left Australia largely without the ability to control the destiny of any single area of defense production vital to Australia’s security, or to control total defense systems for sale to allies in the international marketplace. This is of very real strategic concern.[9]

7.5. Australia’s Armed Forces have demonstrated that they are of a professional caliber to match those of the US, and therefore interoperability issues are of less concern than for most countries’ forces. Similarly, because budget and manpower constraints have realistically limited Australia to operating its ground forces at brigade size as the Army’s principal operational unit, Australian Army operations actually resemble the proposed focus by the US on the brigade as the principal unit of maneuver. In this regard, then, Australia is well-placed to continue to interact with US forces, as in many other arenas.

7.6. Given that the US-Australia alliance structure will continue to be central to Australian security, it is also true that a wide range of other strategic realities will also gain in importance over the coming decade. Australia has its own reasons, apart from the US Alliance, for establishing working relationships with India, the People’s Republic of China (PRC), Japan and other states. It is also foreseeable and highly important that Australia be ready for a transformation in Iran to the point that a change of leadership in that country. In the event of an acceptable change in that country, Australia must consider alliance relations with a post-revolutionary Iran. Similarly, Australia must consider more substantial strategic relations developments with a wide range of other states, including, for example, Egypt (Suez Canal), Somaliland (Red Sea egress), South Africa, and so on. These can and should be considered in light of their interoperability with the US-Australia alliance.

Footnotes:

[1] Australia’s participation in the F-35 Joint Strike Fighter (JSF) process is at present an involvement in the development process for the aircraft, and no decision to acquire the aircraft, definitively, would be made until “around 2006”, according to Australian Minister of Defence Robert Hill’s remarks on June 27, 2002, when Australia signed on as a “developing participant” with Lockheed Martin on the JSF project. Australia committed some A$300-million to the JSF project over a 10-year period. However, the decision to make such a significant financial commitment essentially locked the RAAF into a situation where the acquisition of the JSF would be a strong possibility, precluding to a large degree consideration of any other major combat aircraft until at least 2006, with actual acquisition some years after that. It is fair to say that Australia’s position of relative air superiority within the region — dependent on ageing F/A-18 Hornets and F-111C strike aircraft — will be substantially decreased by the time a new fighter/strike component is introduced into the RAAF. This begs the question as to whether the RAAF would be forced to take interim measures, such as it did when the delivery of F-111s was delayed, necessitating the lease of F-4 Phantom aircraft from the US.

[2] The author does not wish to infer that there was an absence of understanding or dialogue between the US and Australia, or the US and New Zealand, during the period leading up the US-New Zealand schism. On the contrary, US officials, particularly with the Arms Control & Disarmament Agency (ACDA) visited New Zealand frequently in an attempt to resolve the situation in the 1983-85 timeframe. The US was, at the time, committed to deploying Intermediate-range Nuclear Forces (INF) forces into Europe, and believed that it was important to keep New Zealand “in the fold” so as not to provide an example which the Dutch or Belgians could follow with regard to refusing transit or basing to US nuclear weapons. Japanese attitudes were also problematic in this regard, so the NZ situation was of considerable importance to the US Administration, and so allowed Prime Minister Lange to call the USN ship visits an “arms control discussion”. Prime Minister Lange took a disingenuous and demagogic approach to the situation, eventually, and at a press conference called for the removal of all US missiles from New Zealand. There were, however, no US missiles in the country, and it would have been pointless and impractical to have stationed any there. It is presumed that Mr Lange — an evangelical Methodist preacher who hated the US — knew this, but merely made the accusations for the purpose of populist rhetorical impact. However, from this point the NZ involvement in ANZUS unraveled, and this in turn gave impetus to Australian elements who disapproved the US-Australia strategic relationship. The Australian and Japanese governments, as well as senior officials in the NZ Defence Forces and Government, attempted to persuade Prime Minister Lange to reconsider the situation in a more balanced light, but to no avail.

[3] A variety of regional states have either the current or potential capability at some time over the next decade or more to use ballistic missiles to reach Australian targets: the People’s Republic of China (PRC), India, the DPRK, Pakistan and Iran. As in all threat assessments, the maxim remains that the will of a government to act in a hostile fashion can change rapidly, but the capability to represent a threat is based on a measurable force structure, which takes time to develop. As a result, threat assessments must first consider the capability — rather than the will of the governments — of all states, and defensive capabilities to meet threats must be based on potentially hostile capabilities, judiciously assessed in concert with ongoing evaluations of the political trends and will of the foreign governments which hold these capabilities.

[4] This would be consistent with a proposal in the report by the Australian Senate Committee on Foreign Affairs, Defence & Trade — entitled A Pacific Engaged: Australia’s relations with Papua New Guinea and the island states of the south-west Pacific, released on August 12, 2003 — which recommended that an “eminent persons group” be established to investigate the feasibility of creating a new South Pacific economic and political bloc, a “Pacific Economic and Political Community” (PEPC). This PEPC would share a common currency and labor market. Such a bloc, which would automatically feature Australia as its centerpiece, given Australia’s economic and strategic size in the region, would create a powerful new alliance structure — almost a unified new state in some senses — which would effectively link Australasia with the US north-eastern Pacific zone. The report suggested that the proposed community, which would effectively be an evolution of the current loose alignment of South Pacific states with Australia and New Zealand, would have as its goal sustainable economic growth, a common defense and security policy and strategic interoperability, common legal provisions where applicable and common health, welfare and education approaches. The report noted: “Over time, such a community would involve establishing a common currency, preferably based on the Australian dollar. It would involve a common labor market and common budgetary and fiscal standards.”

[5] Significant quantities of intelligence were available from private sources, as well as US, European and Israeli intelligence product before the war to highlight the nature of activities conducted by the Administration of Iraqi Pres. Saddam Hussein in concert with Syria and Libya, in particular, to justify the claim that Iraq had violated the tenets of its 1991 agreements and UN rulings. That this material was not compiled into a comprehensive analytical case for US, Australian and other Coalition leaders highlights both a failure of intelligence at policy or analytical levels, as well as a failure at strategic policy levels. The author, who was directly engaged in intelligence issues to do with this subject during the timeframe concerned, has substantial documentation to justify these points, which are not discussed in detail here because they are merely illustrative of the areas of concern in the US-Australia intelligence arena.

[6] Rapp, William E.: Paths Diverging: The Next Decade in the US-Japan Security Alliance. Carlisle, Pennsylvania, USA, January 2004: US Army Strategic Studies Institute.

[7] Halloran, Richard: US Pacific Command facing sweeping changes; Rumsfeld plan is designed to make forces more responsive. In The Washington Times, February 2, 2004.

[8] The extensive exchange policy, under which Australian military officers attend US defense colleges and undertake exchange assignments with US forces (and under which US officers undertake the reverse), is invaluable for interoperability purposes between Australian and US forces. However, while this also leads to an understanding of how the military systems function in many ways, such experience should not be taken to construe that Australian officials derive an understanding of the way in which US policy itself is formulated. Indeed, the contact and experience between military or Defence Department/Defense Department officials often leads Australian officials down a narrow path, removing them from access to, or understanding of, the less tangible or formal aspects of US policy formation and influence.

[9] Australia developed a significant capability in the manufacture of weapons systems during World War I, for example. Even before that had actually pioneered the development of naval torpedoes, the aircraft design used by the Wright Brothers in 2003, and rotary engines used to power World War I aircraft. By World War II, Australia produced indigenous fighter and transport aircraft designs of world stature; in the immediate aftermath of that war it produced the world’s fastest piston-engine fighter, and subsequently produced a jet fighter design which was adopted as the English Electric Lightning interceptor by the United Kingdom. After World War I, the UK Government essentially told Australia — and South Africa and other dominions — that their mobilization from agrarian to industrial economies was not longer needed, and Australia reduced its defense industrial base. The same situation essentially applied after World War II. The 1985-86 Australian Government decisions to once again achieve a measurable balance of defense industrial self-sufficiency led to a world-class submarine construction capability, which is now being sought by US corporations. It is the view of this author that Australia’s extremely capable and innovative approaches to defense systems — across the board from ground systems to aircraft, missiles and naval vessels — has been insufficiently studied with a view to preserving national independence and national export capabilities, as well as skills which could be passed to other, civil sectors.

February 9, 2004

Australia’s Defense Relations With the United States of America: Approaching a Watershed

By Gregory R. Copley, Editor, GIS¹

1. Introductory Remarks: the Context and Framework of the US-Australia Strategic Relationship

The US-Australian strategic and defense relationship, embodying the Australia-New Zealand-US (ANZUS) Treaty and a wide range of other formal and informal aspects, is arguably the most significant and overriding aspect of Australia’s security for the immediate future, apart from the issue of national self-reliance. However, the US-Australian relationship is not in itself a comprehensive and total safeguard for Australia’s strategic needs even at this time, and nor is its shape and viability guaranteed in the medium- and long-term.

The relationship is, in fact, approaching a watershed which provides the opportunity for both Australia and the US to re-evaluate and re-energize the Alliance and its objectives.

What is inevitable is that the continued growth of Australia as a strategic power — in the economic, social, political as well as defense sense — will automatically determine that an increasing number of Australian priorities will differ from those of the United States. Inevitably, then, the US-Australian relationship will need to reflect Australia’s autonomous and regional rôles just as Australia has historically recognized the reality that the US has strategic priorities elsewhere in the world which do not necessarily or automatically consider Australia.

But before that point is reached, it is important to note that — in terms of major defense operational capabilities — Australia has already committed itself for the medium- and possibly longer term to a significant defense technological dependence on the United States which will transcend the lives of the current US and Australian governments and, indeed, their successor governments. In respect of Australian defense independence, it is fair to say that Australia is now more dependent than ever on its relationship with the United States, largely as a result of technology commitments, such as the decision by the Royal Australian Air Force (RAAF) to proceed with the F-35 Joint Strike Fighter (JSF) procurement. This commitment essentially extends aspects of the relationship for at least three more decades.

It is also fair to note that a technical choice — the decision in 1963 to purchase the (then) General Dynamics F-111C strike aircraft instead of the British Aircraft Corporation (BAC) TSR.2 — was pivotal in changing Australia’s principal defense alignment from the United Kingdom to the United States. By 1963, the ANZUS treaty between Australia, New Zealand and the US was already 12 years old, and yet the treaty signing itself had not caused Australia to move its defense priority from Britain to the US. Rather, the treaty itself became a useful tool when, literally a dozen years after its signing, the Government of Prime Minister Sir Robert Menzies decided that the time was ripe for change, and the F-111 contract became the nexus and visible sign of that change.

However, apart from the interaction and relationships built around defense systems decisions, strategic relationships such as ANZUS are essentially political and perceptional. The fact that ANZUS only acquired true strategic impact for Australia when the Government of Sir Robert Menzies reached the conclusion, in 1963, to switch great-power allegiance from the UK to the US, demonstrates the fact that the Alliance itself is only part of the process.

Equally, the reality is that political and perceptional differences between the New Zealand Government of Prime Minister David Lange and the US Administration of President Ronald Reagan in 1985 caused a fissure in ANZUS, effectively removing New Zealand from the Alliance, despite the fact that New Zealand’s function in intelligence collection in South-East Asia and the South Pacific were — at that time — unique and virtually irreplaceable in the short-term. What is apparent, in hindsight, is that the mis-communication between the Australian and US governments were of a nature which could easily have been prevented had a more intimate and balanced dialogue been in place. Moreover, the schism occurred despite the underlying belief by most US and New Zealand thinkers that there was an absolute transparency of mutual support and trust between the two societies, based largely on mutual US-New Zealand commitments to fight together in World War II, Korea and Vietnam.

Australia assumed the burden of ensuring that the loss of New Zealand-provided intelligence to the ANZUS alliance — and to the UKUSA Accords intelligence process — did not allow serious gaps to occur in the Alliance readiness. This, however, was at some cost to Australia, and allowed the US to proceed with the strategic abandonment of New Zealand without further thought.

The true cost of that political/perceptional mis-step has only become apparent with the passing of almost two decades: New Zealand’s entire political process turned essentially inward and isolationist, and the wealth of New Zealand’s contribution to stability and shared strategic projection in the South Pacific was consistently reduced. This has, in the view of this analyst, had a long-term deleterious affect on New Zealand’s economic wealth, its political influence and strategic viability. During the same period, Australia has grown significantly in terms of global strategic influence, both because of its world-class defense and intelligence capabilities and because of its political-economic growth, despite the fact that other regional states have themselves grown substantially in terms of their own defense/strategic capabilities.

It should also be stressed that while political/perceptional fluctuations have existed at the leadership and public levels of the US commitment to Australia, strategically, there has been a fairly uniform belief (and commitment) at middle-level ranks of the US Armed Forces and Department of Defense (DoD) in the value of the US-Australian defense relationship. This level of the bilateral relationship has also been the easiest for Australian officials to access and maintain. As a result, Australian officials have placed their greatest emphasis on these “working level” relationships. And this in turn has resulted in very successful teaming of US and Australian defense and defense intelligence capabilities, earning Australia and Australian defense and intelligence personnel enormous respect among their US counterparts.

In essence, because this aspect of the US-Australia defense relationship has proven so successful and practical, Australia has neglected almost entirely until this point in ensuring the success of the relationship at a Cabinet and Head-of-State level. This has meant that, regardless of the constancy of the Australian commitment and contribution to the Alliance, there have been significant periods (1977-81 and 1993-2001) when Australia’s larger strategic interests and voice have been ignored in Washington. These periods represent significant gaps in opportunities for Australian strategic progress and engagement in world affairs and periods of missed economic opportunities.

Two factors have assisted in starting to partially break the asymmetric nature of the US-Australia security relationship:

1. The September 11, 2001, terrorist attacks on the US, leading to the “war on terror” and the Coalition war against Iraqi Pres. Saddam Hussein, and the shared perception of a terrorist/radical threat to mutual interests which became inconized by the al-Qaida terrorist attack in Bali; and
2. The shared US-Australian perception that nuclear weapons, delivered by long-range ballistic missiles, represented a potentially hostile capability which could threaten both Australia and the US from a variety states, both currently and potentially.²

However, total reliance on operational, middle-level relationships does not progress the overarching strategic potential of the Alliance.

The Australian Government, at political and Defence Dept./Armed Services levels, has consistently missed the opportunities available to it to advance the Alliance so that it is seen in Washington at the highest levels as one of the most strategically-important relationships of the United States, not just of Australia. By focusing virtually exclusively on bureaucratic relationships with either US career civil servants, uniformed personnel and appointed officials, Australia has missed its opportunities to take full advantage of the broader spectrum of official and unofficial assets which influence and sustain policy directions in the United States. Apart from Administration assets (White House, National Security Council, Department of State, Department of Defense and the Intelligence Community), there are two major areas where policy is effectively made or governed and where it is conceived and influenced:

The US Congress and particularly its committees; and
The non-governmental strategic policy community.

Budget, and the line-item control over funding for, and progress of, specific defense (and other governmental) programs and conflict engagement; and
Promotions of uniformed flag/field rank officers and key levels of appointed bureaucrats, including all ambassadorial appointments.

Australian diplomatic and Defence Dept./Armed Services personnel, by insisting on virtually only sustaining working-level relationships with their career or uniformed counterparts in the US, have consistently rejected the opportunities to embrace relationships with either Congress (on a meaningful and ongoing basis) or with the highly-professional and well-connected non-governmental policy networks which pervade Washington. There has been a willful neglect by Australian officials — based on prejudices developed from the way policy is formulated in Canberra — to understand how defense and strategic policy is shaped in the United States. Even when Washington “think tanks” are engaged by the Australian diplomatic or defense process, they are not effectively or necessarily wisely engaged: there is little understanding of which institutions can help with which tasks.

Evidence of the value of this approach has been seen in US-Australian strategic relations since September 11, 2001, when the Australian Government and Prime Minister Howard have attempted to compound and capitalize the impact of the profound and recent US-Australian defense cooperation in Afghanistan, East Timor and Iraq. But these Australian attempts to expand upon the new-found recognition of Australia’s value as an ally were undertaken essentially as ad hoc responses. The US recognition of Australia’s rôles in Afghanistan, Iraq and East Timor should have been a signal for Australia to re-examine the methodology, as well as the objectives, of the Australia-US defense relationship.

2. The Applicability of the ANZUS Treaty to Australia’s Defense and Security

Quite apart from the high value obtained from the relatively small numbers of Australian personnel in Afghanistan, Iraq and East Timor, the significant contribution of Australian submarine patrol capabilities to the overall ANZUS requirement has been disproportionately high, and recognised as such by the US Navy. The same applies to ongoing Australian contributions to alliance-wide intelligence requirements [discussed below].

At face value, the restoration of New Zealand’s rôle in ANZUS is of greater concern to Australia than to the US, although the substantially increased burden of South Pacific defense responsibilities for Australia eventually impacts on how much capability Australia can deliver to the Alliance. This becomes especially true as physical demands on the Australian defense structure move more to the north and west to safeguard vital resource, sea-lane and littoral assets in the Middle East and Africa, South and Central Asia and South-East Asia.

It becomes a prima facie argument, therefore, that the re-inclusion of New Zealand as an effective partner in ANZUS would provide substantial relief to the Australian and US defense burdens (in economic as well as practical terms), while adding qualitatively to the mission of South Pacific peacekeeping, surveillance and security. Equally, from an overarching strategic standpoint, the return of New Zealand to full partnership in ANZUS would begin to deliver political and economic benefits to New Zealand. This would then substantially contribute to Australian security as well as to Australasian economic and social vitality.

New Zealand’s restoration to full ANZUS partnership is therefore seen as a significant goal for Australia, but one which has not been addressed in recent years because of two main reasons:

The US has not yet been sufficiently pressed, at the highest levels, to see the value of resolving its differences with New Zealand and many US Defense officials remain skeptical of New Zealand’s reliability as a partner; and
New Zealand’s politicians and public felt empowered by the 1985 snub of the US, and have yet to realize the economic cost which the gesture — and the subsequent isolationist and disarmament policies — has had for the country.

Given that Australia has now recommitted to the US defense relationship by its purchase of, among other things, the F-35 fighter, and given that, in any event, the US strategic stature as the dominant world military power will require Australia’s attention and friendship for the next decade (and possibly much longer), it must be construed that ANZUS remains a core of Australia’s defense and security thinking. That does not imply that all other existing and potential security treaties and approaches must be ignored, or even be subordinate to ANZUS. Quite the contrary: the fluid strategic environment of the coming decade will dictate that ANZUS must be a flexible instrument.

This will become more relevant both to Australia and to the US as the People’s Republic of China (PRC) assumes a greater strategic rôle in East Asia and as the US-Japan treaty relationship develops to see Japan assume a more autonomous defense rôle. The same prospect applies to the Republic of Korea (RoK), assuming a continuation and eventual success of the move toward resolution of Korean Peninsula tensions. There are also reasons to believe that the PRC relationship with or toward Taiwan (Republic of China: ROC) can also be effectively managed without conflict.

3. The Value of US-Australian Intelligence Sharing

Indeed, the sheer volume of US-supplied technical intelligence product and imagery holds the potential to distort balanced Australian policymaking because it lacks a balance of contextual input from well-established HUMINT sources and contextual analysis. The lessons of US intelligence relating to the build-up and cassus belli for the 2003 Coalition war against Iraq should be of salutary importance when considering the value of the US contribution to US-Australian intelligence sharing. Given the overwhelming nature of intelligence which was available⁴ to justify the cassus belli, what was significant was that the US intelligence community failed to comprehend, coordinate and present that material in the form of assessments which could have significantly assisted the political and military prosecution of the war. This was largely attributable to the lack of historic continuity in US HUMINT and the function of related experience in developing assessments.

Having said that, the lack of independent analytical capability in Australia, in terms of strategic intelligence assessments, has only now begun to be addressed.

4. The rôle and Engagement of the US in the Asia-Pacific Region

The growth — and increasing sophistication — of the People’s Republic of China (PRC) as a major economic, political and military power in the region;
The potential for resolution or transformation — either through evolutionary politics or conflict — of the Korean Peninsula state of war;
The development of regional capacities for the refinement of threats related to ballistic missiles and nuclear warheads (principally by the PRC and DPRK, but also by India and potentially the ROC: Taiwan), as well, in response, as the US-led developments of technologies — principally anti-ballistic missile (ABM) systems — to counter the threats at an operational level, and strategic actions to force constraint at other levels;
The development of increasing strategic autonomy by Japan from the post-World War II attitudes and perceptions;
The ongoing need of the US, as a global power, to sustain a physical presence in the Asia-Pacific region, as well as the Indian Ocean region, simply to safeguard and project US economic interests;
The development of Central Asia as a new area of US energy dominance, with attendant military-strategic implications for the PRC, Russia, the Arabian Peninsula and Persian Gulf states, Red Sea/Suez sea lanes of communications (SLOCs) linking with Asia-Pacific SLOCs, and so on.

Substantial changes already occurred in the mode of deployment of US forces in the Republic of Korea in 2003, partly as a response to the Minju Dang (Millennium Democratic Party: MD) candidate Roh Moo-hyun, 56, who won the December 19, 2002, Presidential election on the basis of a continued engagement of the DPRK and criticism of the US hard line against the Pyongyang Government. The approach of Pres. Roh’s Government led the US George W. Bush Administration to take the US 2^nd Division out of the direct line-of-fire along the Demilitarized Zone (DMZ) and force the ROK Armed Forces to take the initial brunt of any prospective DPRK attack. This forced the ROK to rely less on the US to suffer the major consequences of a surprise DPRK attack, while at the same time giving the US far greater strategic military depth and flexibility in any possible conflict with the DPRK.

In a significant review of the US-Japan alliance published in January 2004, US Lieutenant-Colonel (P) William E. Rapp noted:

“Japan is risk-averse, but increasingly self-aware, dramatic (in Japanese terms) security policy changes will continue to be made in small, but cumulative steps. These changes in security policy and public acquiescence to them will create pressure on the alliance to reduce asymmetries and offensive burdens since the ideal, long-term security future for Japan does not rely on the current rôle vis-à-vis the United States. Both Japan and the United States must move out of their comfort zones to create a more balanced relationship that involves substantial consultation and policy accommodation, a greater risk-taking Japanese rôle in the maintenance of peace and stability of the region, and coordinated action to resolve conflicts and promote prosperity in the region.”

Both Japan and the US have clearly been probing new defense options in Asia and the Pacific to achieve their strategic objectives. The US interests in Asia are now more diffuse than they were for much of the post-World War II era: the US must focus strongly on current or potential operational requirements built around potential operations related to Korea, Taiwan and Afghanistan, along with instabilities in Indonesia and the South China Sea (Spratlys). For the first time, developments after September 11, 2001, necessitated that the US for the first time truly see the Pacific and Indian Ocean theatres as being integral, and yet without the same fixed basing which had been available during the Cold War. As well, US budgets are now more constrained than in the past: airlift is severely challenged within the US force structure, as is aerial refueling capacity.

Inevitably, the US must rely more on strategic partnerships throughout the regions, and these relationships must vary in their nature given the challenges and resources available.

Nonetheless, constraints on US forces and budgets will mean that the US will increasingly need to rely on Australian force capabilities to meet mutual strategic goals, particularly in the Indian Ocean and South-East Asia. The US reliance on Australian defense capabilities in the post September 11, 2001, period seems unlikely to diminish except in the event that the US unilaterally abandons its “war on terror” and its commitment to developing and furthering its energy and strategic interests in Central Asia and its need to maintain at least a degree of partnership with Indian defense forces.

In summary, US defense strategies and deployments in the Asia-Pacific region — including, by association, the Indian Ocean and Central Asia — will become increasingly constrained by budgets and existing capabilities. This has been recognized within the current phase of US defense restructuring. It was revealed at the beginning of February 2004 that US Defense Secretary Donald Rumsfeld was planning a “sweeping revision” of the US command apparatus throughout Asia and the Pacific, a region which draws on a force of some 300,000 US service personnel: the largest combatant command in the US Defense forces.

In Japan, it was expected that the United States Forces Japan (USFJ) command would be abolished and be replaced by an operational corps headquarters under a lieutenant-general.

US Pacific Command spokesman Capt. (USN) John Singley said:

“The Pacific Command is currently reviewing plans to strengthen our defense posture as part of a larger US Government global effort in that regard. We are currently consulting with our allies and partners in the region and will continue to do so before any decisions are made.”

The US and ROK governments had already announced in 2003 that the US HQ in Korea would move from the Seoul area to a new site some 75 miles south, along with the move of the US 2^nd Div., noted above. At the same time, the US made it clear that it was moving to smaller, more flexible ground force structures, effectively making the brigade, rather than the division the principal unit of ground force maneuver in future conflict. This Army restructuring was less significant to US-Australian defense relations in terms of the Pacific, but will obviously be of critical importance to future US-Australian joint operations in any area of the world.

5. The Adaptability and Interoperability of Australia’s Force Structure and Capability for Coalition Operations

6. The Implications of Australia’s Dialogue With the US on Missile Defense

Given the momentum of the work, the Clinton Administration which replaced the Bush 1 Administration merely continued the momentum of the ABM programs at a limited level.

Footnotes:

1. Gregory Copley, Editor of the Global Information System and Defense & Foreign Affairs publications, is an Australian citizen who has been based in the US for more than three decades, covering defense and strategic policy issues. Apart from his rôle as President of the International Strategic Studies Association (ISSA), the publisher of GIS and Defense & Foreign Affairs, he is a founding Director of the Australian strategic research institute, Future Directions International (FDI) and a Director of FDI’s US arm, FDI US-Australia Foundation, Inc.

2. A variety of regional states have either the current or potential capability at some time over the next decade or more to use ballistic missiles to reach Australian targets: the People’s Republic of China (PRC), India, the DPRK, Pakistan and Iran. As in all threat assessments, the maxim remains that the will of a government to act in a hostile fashion can change rapidly, but the capability to represent a threat is based on a measurable force structure, which takes time to develop. As a result, threat assessments must first consider the capability — rather than the will of the governments — of all states, and defensive capabilities to meet threats must be based on potentially hostile capabilities, judiciously assessed in concert with ongoing evaluations of the political trends and will of the foreign governments which hold these capabilities.

3. This would be consistent with a proposal in the report by the Australian Senate Committee on Foreign Affairs, Defence & Trade — entitled A Pacific Engaged: Australia’s relations with Papua New Guinea and the island states of the south-west Pacific, released on August 12, 2003 [see report, below] — which recommended that an “eminent persons group” be established to investigate the feasibility of creating a new South Pacific economic and political bloc, a “Pacific Economic and Political Community” (PEPC). This PEPC would share a common currency and labor market. Such a bloc, which would automatically feature Australia as its centerpiece, given Australia’s economic and strategic size in the region, would create a powerful new alliance structure — almost a unified new state in some senses — which would effectively link Australasia with the US north-eastern Pacific zone. The report suggested that the proposed community, which would effectively be an evolution of the current loose alignment of South Pacific states with Australia and New Zealand, would have as its goal sustainable economic growth, a common defense and security policy and strategic interoperability, common legal provisions where applicable and common health, welfare and education approaches. The report noted: “Over time, such a community would involve establishing a common currency, preferably based on the Australian dollar. It would involve a common labor market and common budgetary and fiscal standards.”

4. Significant quantities of intelligence were available from private sources, as well as US, European and Israeli intelligence product before the war to highlight the nature of activities conducted by the Administration of Iraqi Pres. Saddam Hussein in concert with Syria and Libya, in particular, to justify the claim that Iraq had violated the tenets of its 1991 agreements and UN rulings. That this material was not compiled into a comprehensive analytical case for US, Australian and other Coalition leaders highlights both a failure of intelligence at policy or analytical levels, as well as a failure at strategic policy levels. The author, who was directly engaged in intelligence issues to do with this subject during the timeframe concerned, has substantial documentation to justify these points, which are not discussed in detail here because they are merely illustrative of the areas of concern in the US-Australia intelligence arena.

5. Rapp, William E.: Paths Diverging: The Next Decade in the US-Japan Security Alliance. Carlisle, Pennsylvania, USA, January 2004: US Army Strategic Studies Institute.

6. Halloran, Richard: US Pacific Command facing sweeping changes; Rumsfeld plan is designed to make forces more responsive. In The Washington Times, February 2, 2004.

August 14, 2003

Australian Parliamentary Paper Proposes Major New Strategic Bloc for SW Pacific

Analysis. By Gregory R. Copley, Editor, GIS, in Sydney. A report by the Australian Senate Committee on Foreign Affairs, Defence & Trade has recommended that an “eminent persons group” be established to investigate the feasibility of creating a new South Pacific economic and political bloc, a “Pacific Economic and Political Community” (PEPC). This PEPC would share a common currency and labor market.

Such a bloc, which would automatically feature Australia as its centerpiece, given Australia’s economic and strategic size in the region, would create a powerful new alliance structure — almost a unified new state in some senses — which would effectively link Australasia with the US north-eastern Pacific zone.

The report was entitled A Pacific Engaged: Australia’s relations with Papua New Guinea and the island states of the south-west Pacific, and was released on August 12, 2003.

The report suggested that the proposed community, which would effectively be an evolution of the current loose alignment of South Pacific states with Australia and New Zealand, would have as its goal sustainable economic growth, a common defense and security policy and strategic interoperability, common legal provisions where applicable and common health, welfare and education approaches. The report noted: “Over time, such a community would involve establishing a common currency, preferably based on the Australian dollar. It would involve a common labor market and common budgetary and fiscal standards.”

The proposal goes further than the Association of South-East Asian Nations (ASEAN) and at least as far as the European Union (EU) in terms of its vision of unification. It seems likely that such a body could be seen as competitive in some respects to neighboring ASEAN, which has effectively and consistently kept Australia and New Zealand at arm’s length, as well as to the People’s Republic of China (PRC), which would view the bloc as an effective constraint on its own expansion into the Pacific (while at the same time preserving the US-Australian domination of much of the region). Similarly, the Government of New Zealand would be expected to resist Australian domination of such a bloc, and Wellington could be expected to support such a system only if it was not obviously Australian-dominated. Economically, however, New Zealand could not afford to absent itself from such a structure if Australia was to effectively lead its creation.

The Senate report made 33 recommendations on Australian relations with Papua New Guinea (PNG) and the south-west Pacific. One such recommendation was to create an Australia-Pacific Council to recommend initiatives which would deepen Australian relations with South Pacific states. What was not mentioned in the Senate report was the implicit feasibility of a “Western aspect” to such an alignment, strengthening Australian commitment to and in its Indian Ocean components, such as those at Christmas Island. Equally, given Australia’s significant dependence on the Indian Ocean sea lanes and its growing involvement in Middle Eastern trade, Westward linkages to, for example, Seychelles, Madagascar and other states would have strategic attraction for Australia in the medium-term.

Not only Australia, but also Papua New Guinea falls within the category of a link territory between the Pacific and the Indian Oceans.

Australian Prime Minister John Howard was likely to have taken the Senate report into consideration before attending the South Pacific Forum, which was due to open in Auckland, New Zealand, on August 14, 2003. That the United States was taking an active interest in regional development, particularly since the East Timor independence issue beginning in 1999, was clear from the visit to Canberra on August 12, 2003, by US Deputy Secretary of State Richard Armitage, who, at a meeting with Prime Minister Howard, support Australia’s active leadership rôle in the Solomons peace enforcement operations currently underway.

[See Defense & Foreign Affairs Daily, August 5, 2003: Australian Forces Deploy New UAV Systems in Solomons Peace Enforcement Operation.]

The report’s introduction noted: “Australia has an obligation to assist Pacific States protect their security and stimulate their economies, the Committee sought to consider different ways in which Australia might assist in achieving this outcome.” The Committee’s recommendation to form the PEPC was based on:

This recommendation is based on the following considerations:

The economic and social problems of the region are worsening.
Australia has a responsibility to assist nations in the Asia Pacific region.
If sustainable regional economic growth can be achieved issues of governance, international crime, law and order, regional security and the health and well being of people living within the region, and in Australia, will improve.
The region is made up of 16 countries which are independent and sovereign entities whose independence is respected.
Many of the countries suffer the problems that arise in small nations with micro economies. To obtain sustainable economic growth, reform needs to be pursued across the region by all nations taking into account the special issues affecting small countries.
While all nations have the right to pursue their own economic goals, each nation has an obligation to the other countries in the region to achieve economic reform and sustainable growth.
If the region continues to decline, the costs to Australia of dealing with the consequences will be much greater than the costs to Australia of moving to establish a community which can increase regional prosperity.

The comprehensive Committee report also noted:

“It is the view of the Committee that, if sustainable economic development is achievable, countries will have a basis for tackling the challenges of poverty, law and order, and the development of governance structures that promote greater democracy, which in turn reinforce economic wellbeing.”

“Generally, Pacific economies are characterized by a dependence on the production of raw materials such as minerals, timber, copra and coffee and in the case of Fiji, sugar. Such dependence is becoming problematic as raw commodity prices decrease in response to trade becoming increasingly liberalized. With the exception of PNG and Fiji, the economies are very small, domestic purchasing power is not strong and there is a heavy dependence on external markets with intra-regional trade being nominal (although, with the introduction of the Pacific Island Countries Trade Agreement [PICTA] this may increase). In addition, the economies are not only small, open economies, but have limited capital market access and a high dependence on imports.”

“In the Committee’s view, there will be serious implications for Australia if economies in the region collapse. The Committee considers it very much in Australia’s commercial and political interests to continue to build sustainable and culturally acceptable economic relations with PNG and all the Pacific island countries.”

The Committee was critical of earlier Australian neglect of some aspects of relations with the South Pacific Community, noting:

“The annual Pacific Islands Forum meeting is considered by some to be “the principal opportunity for the Australian Government to show its commitment to the region through attendance at the highest level of government”. The Australian Prime Minister was criticized for having not having attended all Pacific Island Forum meetings since the government was first elected in 1996.”

“Evidence to the Committee suggested that the non–appearance of the Australian Prime Minister is a direct insult in cultures where status, recognition and the conventions of identity are of paramount importance.”

“The Committee also gained a strong understanding of the importance for Pacific island countries of the attendance of the Prime Minister at these meetings from its discussions during its visit to the region. The attendance of the Prime Minister acknowledges the importance of the region to Australia.”

Significantly, the Committee report, although addressing security concerns at a local level and touching on issues of narco-trafficking and money laundering, terrorism and the like, did not touch on the subject of over-arching strategic importance of the proposed PEPC. This was the sub-text of the report — perhaps unconsciously — and equally, the report did not look at the ramifications for possible extension of a sphere of influence westward, nor the strategic ramifications with regard to ASEAN, the PRC or the US-Australian alliance. But it would not be possible to view the implications of the Committee’s proposals, which were essentially humanitarian and economic in their considerations, without recognizing the broader strategic implications.

August 5, 2003

Australian Forces Deploy New UAV Systems in Solomons Peace Enforcement Operation

Analysis. From GIS sources in Honiara. Australia’s most significant force deployment since the March-April 2003 Iraq War is now making significant headway in a peace enforcement operation to end the civil war still underway in the Solomon Islands in the South Pacific. Significantly, the 2,300-man force was being supported by the first deployment of new, Australian-developed unmanned aerial vehicles (UAVs).

The four UAVs are Australian-designed and -built Aerosonde aircraft, operated by SAAB Australia; they are equipped with day and night sensors and communications equipment, and were deployed for real-time surveillance of the Solomon Islands remote areas and coastlines, providing images to military personnel on the ground and headquarters staff. The aircraft were part of a developmental program, Project Nervana, being run by the Australian Department of Defence’s Defence Science & Technology Organisation (DSTO) to investigate methods of automating the battlefield. This included the examination of how images from the UAVs could be distributed to commanders on the ground, providing a real time surveillance capability.

The detachment was being commanded by 131 Surveillance and Target Acquisition (131 STA) Battery which has responsibility for developing the Australian Army’s UAV procedures. The UAVs in the Solomons were be operated and supported by Army scientists, engineers and other support personnel as well as Defence Scientists from DSTO

Initial indications were, on August 4-5, 2003, that the Australian-led peace-enforcement operation in the Solomon Islands has begun exceptionally well, with some of the rebel forces sensing that there was a stronger sense of purpose in the force than might have been the case before the “Iraq example”. The Australian forces, in particular, made it clear that force would be used to protect the police component of the operation; the police have essentially been charged with conducting the disarmament function, which has an August 21, 2003, deadline.

The Australian-led force began arriving in Honiara in late July 2003, and Australian Foreign Minsiter Alexander Downer visited the Solomons to inspect the peacekeeping operation, and departed for Australia on August 1, 2003.

The leader of the multinational team, Australian Mr Nick Warner (designated as Australian Special Coordinator for the mission), was reportedly set to meet by August 8, 2003, with one of the rebel leaders, Harold Keke, of Weathercoast, which operates along the Western end of the Guadalcanal coastal area known as Weathercoast, on the opposite side of Guadalcanal from the Solomon Islands capital, Honiara. Weathercoast has demanded, in the past, independence of Guadalcanal from the Solomon Islands. Mr Keke in 2002 had confessed on a radio program that he had assassinated the Minister for Youth and Women, Augustine Geve.

Leaders of another Guadalcanal rebel group agreed at a meeting with Mr Warner at Avu Avu, on the eastern end of Weathercoast, to surrender their weapons to the multinational force. That particular group was in opposition to Weathercoast. Mr Warner had already secured agreement for the surrender of weapons from the Malaita Eagles Force (MEF), and had arranged to establish an outpost of the peacekeeping force at Avu Avu by August 4, 2003. Militant leader Andrew Te’e [Isatambu Freedom Movement (IFM)] said on August 1, 2003, that his followers would be handing in weapons on August 6, 2003, and highlighted that much of the problem was due to the widespread killings undertaken by Harold Keke’s Weathercoast group. Solomons Police had earlier — before the peacekeeping force began deployment — issued “high-powered weapons” to Mr Te’e’s supporters for protection against Weathercoast rebels, who have been blamed for 50 deaths thus far.

Meanwhile, over the weekend of August 2-3, 2003, Solomons opposition leaders had demanded that Prime Minister Sir Allan Kemakeza resign.

The multinational intervention force — labeled as a “regional assistance mission”, includes: Australia, New Zealand, Fiji, Papua New Guinea (PNG) and Tonga, with Australia leading the team and providing the logistical capabilities for the force. The Australian aspect of the operation is known as Operation Anode.

The Royal Australian Navy ship, HMAS Hawkesbury, departed Sydney on July 28, 2003, to provide patrol assistance for Operation Anode, but earlier, on July 24, 2003, the first Royal Australian Air Force (RAAF) C-130J Hercules transports departed Townsville, Queensland, with the initial troop deployments for the Solomons, along with Australian Special Coordinator Mr Nick Warner, members from the Australian Police and Defence Forces of Australia, New Zealand, PNG, Fiji and Tonga as well as some Australian Protective Service personnel.

Significantly, by 2002, the conflict in the Solomons had appeared to have been under control. Former conflicting militants had joined together in a ceremony in Honiara on July 19, 2002. The reconciliation ceremony between former members of the Malaita Eagles Force (MEF) and Isatambu Freedom Movement (IFM) was held at the Police Club in Rove. The former militants were those who came from North Malaita (Tobaita) and those from Northeast Guadalcanal. The ceremony was attended by Prime Minister Sir Allan Kemakeza, and Minister of National Unity, Reconciliation and Peace Nathaniel Waena. A traditional chief for the North Malaita group said the reconciliation was organized so that the two groups from those different parts of the two provinces may live again in peace, forgetting about their involvement in the more than two years of ethnic tension. Former MEF commander, Jimmy Raster, spoke on behalf of the North Malaita group, while former IFM commander, Andrew Te’e spoke for the Northeast Guadalcanal group. Among others speakers in the ceremony were member of Parliament for North Malaita, Daniel Fa’afunua, and member of Parliament for Northeast Guadalcanal, Stephen Paeni.

On June 29, 1999, the warring sides in the Solomon Islands signed a peace accord by Commonwealth mediator Sitiveni Rabuka, to end six months of ethnic tension. Rabuka, former Fiji Prime Minister and Chairman of the Fiji Great Council of Chiefs went to the jungles east of Honiara and sold the deal to militant fighters and persuaded them to lay down their arms. The Isatambu Freedom Fighters (IFM) group led a campaign to drive settlers from Malaita Island off the main island of Guadalcanal. The four-page peace accord was finalized over the meetings with representatives of the Guadalcanal and Malaita provincial governments.

April 9, 2002

Is a Federation of Australasia a Strategic Inevitability?

The urgency of addressing an ANZAC union forces the timetable for a debate.

Analysis. By Gregory R. Copley, Editor, GIS. Australia and New Zealand are rapidly approaching a strategic watershed which will determine how well they survive into the coming century. In many respects, they are almost as close as two nation-states could be; in some respects they are drifting apart. But if they are to prosper and remain strong a century from now, it is almost axiomatic that they will need to consider moving along a strict timetable toward political union (federation or confederation), possibly under the eventual title of Australasia, the generic name for the Australian and New Zealand region.

They are countries with dramatic similarities in their cultural heritages in that their modern history has been in lock-step since colonial history began under Britain for both in the 18th Century. They have differing physical environments in some respects, despite being neighbors, and the indigenous population of each differs markedly from the other in ethnicity and tradition. But these — the greatest of the differences between Australia and New Zealand — are insignificant boundaries to their cooperation and integration.

April 25, 2002, marked 87 years of a common bond between Australia and New Zealand, a bond which seemed to smelt the ethos, values and identities of the two states into a single ANZAC steel. On April 25, 1915, both states, their troops fighting together as the Australian and New Zealand Army Corps — ANZAC — began a military campaign which proved the mettle of their societies by the manner in which they handled the bloody defeat at Gallipoli, Turkey, less than a year after the invasion of Turkey began.

The Threats

Military Threats. The threat to Australia and New Zealand over the coming century from military causes are difficult to quantify, but may well exist. The present mood in New Zealand — which is not necessarily articulated this way in the country — is that it is so remote, physically, that it has nothing to fear, and can, essentially, “hide” behind Australia. New Zealanders would take offense at this characterization, but this is essentially the Government’s position. This does not reflect on the indisputable courage of New Zealanders in war; historically, they have been in a class beyond compare. Nor does it reflect on the professionalism of the NZ fighting forces, which are of outstanding quality. Rather, it reflects on the economy, and the Government’s spending priorities. That, and manpower availability, gets to the core of NZ’s problems.

Thus, to all intents, Australia provides the strategic military umbrella for New Zealand. And NZ itself is now providing manpower, through voluntary recruiting, to the Australian Defence Forces (ADF).

The Population Threat. Australia’s population was, in 2000, put at 19.16- million, so is probably now around 20- million. New Zealand’s population was, in 2000, estimated at 3.819-million. Australia’s population in 1976 was put at 13.7-million; New Zealand’s population was estimated in that year at 3.1-million. Australia’s population, then, in the 1976-2002 timeframe grew by some 46 percent; New Zealand’s grew by 23 percent. The comparison alone tells a significant story.

Defense & Foreign Affairs Strategic Policy noted in its 7-2001 edition that there was “A recognition that New Zealand, Australia’s traditionally closest ally, is imploding politically and socially in many ways, with some 60 percent of its university graduates leaving the country each year. New Zealand could, if present emigration trends continue, return to being a Polynesian country within 50 years, leaving Australia as the sole “Western” country in the region. And in defense terms, New Zealand’s uninspired economy has meant that the country is no longer a factor in regional military affairs. Asian and Middle Eastern immigration into Australia is also substantially transforming the Western character of Australia.”

In 1976, seven percent of the NZ population was listed as Maori, the Melanesian people of the country; in 2000, the percentage of Maori peoples in NZ was listed at 8.9 percent. While many in Australia and New Zealand applaud the rising and highly contributory rôle of the Maori in NZ life and culture, the statistics show the changing nature of New Zealand. Similarly, the statistics for non-European immigration into Australia have changed the cultural perspective there. [Additionally, however, the NZ statistics do not reflect the fact that much of the country’s population lives abroad; the second largest concentration of New Zealanders has for decades been in Sydney, Australia, second only to Auckland, New Zealand.]

While population levels do not necessarily have a bearing on overall prosperity and political viability, New Zealand’s population changes and growth rate do, in fact, mirror the declining economic competitiveness of the country, despite a number of significant initiatives taken to correct the problem.

Contributory Issues

Australia and New Zealand shared a common link with the United Kingdom, and then with the United States. It was almost taken for granted that the foreign and strategic policies of the two governments would be in total harmony. Their intelligence functions within the Australia, New Zealand, United States (ANZUS) alliance were absolutely complementary; both states participated with equal commitment to supporting the US in the Vietnam War; they worked together on the Malayan campaign and in the Korean War. They were as one.

This changed in the 1980s when both the New Zealand leadership and the US leadership acted in a manner which was detrimental to both states. For New Zealand, the issue was to prove strategically disastrous; for the US, its unwarranted heavy-handedness and insensitivity caused problems which the sheer size of the US could easily ignore. But it did diminish the US reach into Asia, and caused problems for Australia.

Ultimately, however, the actions also strained Australian and New Zealand relations, and began a rift which — despite the practical cooperation between the governments on both sides of the Tasman Sea — has become an emotional barrier.

Strains within the ANZUS alliance increased in July 1985, when US Secretary of State George Shultz criticized NZ Prime Minister David Lange’s foreign policy during a visit to Australia. Shultz noted in particular New Zealand’s refusal to accept a US Navy port call in February 1985 without the assurance that the vessel was not carrying nuclear devices.

On December 10, 1985, the New Zealand Government introduced into Parliament its anti-nuclear legislation, one clause of which threatened to end the 34-year-old ANZUS defense alliance. The clause, which New Zealand claimed was a compromise, was not well received by the US. It stated that all foreign nuclear-armed and powered vessels would be banned from entering New Zealand’s “internal waters”, but not its territorial waters. Nevertheless, it did recognize that it is US policy neither to confirm nor deny whether its ships are nuclear capable; therefore, the legislation would not require the US to comment on the vessel’s nuclear status. That decision would be made solely by the New Zealand Prime Minister. The US refused to negotiate on this issue and threatened to end the ANZUS alliance if New Zealand passed such legislation.

Two copies were presented to the US and Australian Governments just prior to the legislation’s introduction into Parliament. Although Australia disagreed with New Zealand’s anti-nuclear stand on this issue, NZ Deputy Prime Minister Geoffrey Palmer said, after a meeting with Australian Foreign Affairs Minister Bill Hayden, that he did not expect pressure from Australia. New Zealand Prime Minister David Lange introduced the nuclear-free zone, disarmament and arms control bill into Parliament. Although the Government pledged to keep secret any requests for warship visits to New Zealand ports, as well as any refusal to admit a warship to New Zealand, Lange did not make clear the process that he would use.

US-NZ relations have, since that time, been cool. Although no stronger ally to the US could be imagined than NZ, Australia and the UK, the US from that point excluded NZ from the UK-USA Accords, the intelligence-sharing body which included the US, UK, Canada, Australia and New Zealand. This meant that Australia and NZ had to restructure their own intelligence- sharing to protect the US-Australian intelligence arrangements. NZ withdrew its signals intelligence functions from SE Asia, where it had provided a vital input into the system. This loss — to the US as well as its allies — has not yet been fully addressed.

The net effect was to force NZ into a political and cultural isolation, which has further distorted its strategic outlook. The emotional reaction to the isolation was for NZ to reject what it formerly regarded as its alliance-based military sharing obligations. This placed a greater burden on Australia, with attendant resentment on both sides of the Tasman.

Despite this, the fact cannot be ignored that Australia and New Zealand are like brothers who emigrated to a distant and potentially hostile land. They have, in a sense, only each other. No other alliances or relationships can compensate for the kinship and mutual need which exists between them.

The Formal Bilateral Ties

Economic: Australian and New Zealand economies in many ways act as one, even though the present and recent cultural divide between them has restricted some Australian investment in NZ. But both are parties to the Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA), or CER. The CER Agreement was built on a series of preferential trade agreements between Australia and New Zealand, including the 1966 New Zealand Australia Free Trade Agreement (NAFTA). By the late 1970s, NAFTA and its predecessors had removed tariffs and quantitative restrictions on 80 percent of trans- Tasman trade. Further advances under NAFTA were limited because it lacked a mechanism for compulsorily removing remaining restrictions. Of concern to Australia was the absence of a mechanism for removing New Zealand’s import licensing restrictions. The existence of import licensing restrictions often negated the benefits derived from eliminating tariffs.

The Agreement on Establishing a System for the Development of Joint Food Standards (the ANZFA Agreement), signed on December 5, 1995, was the first trans-Tasman agreement to create a single regulatory agency tasked with developing joint standards for both Australia and New Zealand.

Defense: Australian-NZ defense cooperation falls under the bilateral commitment to ANZUS and the Closer Defence Relations (CDR) arrangement, CDR running parallel with CER. The trans-Tasman economic relationship was for some time enhanced by defense industry cooperation under CDR. The ANZAC frigate project was the largest example of bilateral industry cooperation, delivering significant industrial benefits on both sides of the Tasman, including, as of July 1, 1996, sub-contracts of A$2-billion for Australia and A$360-million for NZ. More than 700 Australian and 400 New Zealand companies participated in the industry program either as suppliers to the prime contractor or as suppliers to local or overseas companies sub-contractors. But the Royal NZ Navy was forced to cut its ANZAC frigate orders down to one vessel, and the cooperative industrial benefits withered for NZ. [The Royal Australian Navy has four ANZAC-class frigates, with four more on order.]

Under CER/CDR, Australia and NZ share a common market for government tendering, and both countries also work to make the defense sector of that market as accessible as possible to trans-Tasman industry. Both countries maintain a common defense industry database and defense industry committees have been established to enhance trans-Tasman cooperation.

The Options

Few serious analysts on either side of the Tasman doubt the necessity for ongoing close ties between Australia and NZ. However, NZ, which strategically needs the partnership more, is emotionally the most fearful of it, and extreme isolationist views drive global economic integration, and therefore investors, further away.

The stage is set for both Australia and NZ to retain their cultural and psychological identities under a Confederation which could address strategic issues. A union of the Australian and New Zealand defense forces would make immediate sense, with their actions governed by an ANZAC Defence Council. This could rationalize defense spending, possibly limiting rises in defense funding from NZ taxpayers while opening a broader recruitment base for the forces. Such a commitment could presage a reintegration of NZ into ANZUS, although this would require greater sensitivity from Washington than was shown in 1985.

The Commonwealth of Australia is already a federation comprised of seven separate and sovereign constitutional monarchies. An overarching Confederation of Australia and New Zealand would be more easily negotiated now than if Australia had voted in its 2000 referendum to become a monolithic Federal Republic, limiting the sovereignty of the states.

Ultimately, given Australia’s and NZ’s regional ties, a new Confederation could embrace some of the smaller Pacific’s Melanesian states, long dependent Canberra and Welling ton. There is ample scope to preserve individuality while strengthening strategic viability of an Australasian Confederation or Federation. And if Canberra was to be the capital of such a grouping, it would at least be more central to the union than it is today.

September 17, 2001

Clinton Helps Fundraising for Australian Opposition in Build-up to Elections, But Xenophobic Reaction to Illegal Immigration, Attacks on US Help Incumbent

Former US President William Clinton on September 9, 2001, spoke in Sydney at a discreet fundraising dinner which was understood to have raised some A$1.5-million (US$772,000) for the Australian Labor Party (ALP) — the principal opposition party — as part of its preparations for the forthcoming Federal elections. The fundraising was becoming critical because although the ALP under conservative and pro-US leader Kim Beazley had looked almost certain in mid-2001 to sweep the election in the face of lackluster performance by Prime Minister John Howard and the Liberal-National Party coalition Government, events in September 2001 dramatically overturned the political situation.

The use of defense assets to stop the landing of several hundred mainly-Muslim illegal immigrant "boat people" on an Australian Indian Ocean island boosted the Prime Minister's popularity among the Australian public, long-since soured over the seemingly endless flood of economic refugees coming into the country via Indonesia, mostly from Iraq and Afghanistan. This event was followed by Prime Minister Howard's presence in Washington DC at the time of the September 11, 2001, terrorist attacks on the US. This compounded the Australian electorate's concern over the illegal Muslim immigration to the country (legal Muslim immigration from Lebanon and other countries has been extremely successful, and not disruptive to the Australian electorate), and further entrenched the Government's electoral security in the build-up to the coming elections. This despite the fact that Mr Howard's Government had gone back on many election promises, particularly with regard to taxation.

As a result, the ALP's fundraising took on an air of urgency, and 44 major party donors gathered at Double Bay's Stamford
Plaza hotel in Sydney to hear former Pres. Clinton's 45-minute dinner speech on the challenges confronting the world. After a Sydney Morning Herald report two months earlier detailing ALP plans to charge business guests $50,000 to dine with Mr Clinton, Labor
said that the proposal had been dropped. However, it was clearly later redrafted.

Significantly, Mr Clinton made it clear in his speech and conversations at the dinner that he saw his own politics as nearest to Labor's in Australia. However, it is known that the ALP leadership, and particularly Kim Beazley, believe that their own interests are closer to those of the Republican Party in the US.

July 10, 2001

Australia Abandons Plans for Domestic Combat System for Collins-class SSKs; Looks to US

The Australian Government on July 9, 2001, acknowledged that its work to create its own combat system for the six Collins- class submarines had ended, and that the Royal Australian Navy (RAN) would opt for a US system. Two tenderers, US-based Raytheon and European-based STN Atlas, had also been involved in bidding for the system, but that tender process had now ended.

Australian Defense Minister Peter Reith said that US Navy help had already improved the Collins' hull and propeller, and increased cooperation was of overarching strategic importance to Australia. He said: " The Australian and US Navies are entering into a Statement of Principles arrangement to achieve a shared goal of maximum cooperation and synergy on submarine matters. As I said in my recent address to the ANZUS Conference, these arrangements will give Australia even better access to US military technology which gives us a vital edge in capability and operations. One of these vital and sensitive areas is in submarine technology. US Navy assistance with hull, mechanical and propeller technology has been critical in improving acoustic performance and overcoming significant shortcomings in the Collins-class."

" Increased cooperation and interoperability on submarine matters with the US, together with the increasing national security cooperation opportunities this provides, is of overarching strategic importance to Australia. This will enhance tactical growth and long term interoperability of the Australian submarine force in cooperation with the US."

He continued: " The selection process for the heavy weight torpedo has also been terminated. A new arrangement will be developed by the Australian and US navies under a cooperation agreement. The benefits of this decision include greater access to US Navy tactical information, resupply in time of need and the provision of torpedo firing exercises with US submarines."

July 9, 2001

Australia’s Watershed of Change, Threats, Growth

Analysis. By Gregory R. Copley, GIS Editor. One author called Australia "The Lucky Country", and many of its citizens still consider it so. But it is facing a strategic watershed and trans- formation which will demand all of the resourcefulness with which Australians transformed an extremely harsh and ecologically delicate environment into a productive Western society implanted into Asia. Whether Australia remains “a Western country” in the next 50 years will in large part be determined by the policies adopted over the coming few years.

The present Liberal Party-National Party coalition Government of Prime Minister John Howard must call new elections before the end of 2001, and it is problematic — even unlikely — that the Administration will be returned to office, given trends at mid-2001. It is likely that the Australian Labor Party (ALP), under former Defence Minister and former Deputy Prime Minister Kim Christian Beazley, will be voted into office, but with an agenda virtually as centrist as that of the Howard Government.

Ironically, however, a Beazley Government would almost certainly have a closer and more effective alliance relationship with the United States, despite popular opinion that conservative Australian governments have better relationships with Washington. But while a Beazley Administration would strive for a more productive relationship with the US, it faces a number of realities:

A recognition that the US in future is unlikely to spring to the defense of Australia except when such action coincides with US interest. There is now a realization that the traditional loyalties between the two states no longer extends to guaranteed military support under all and any circumstances;
A recognition that, after decades when the Australian dollar has been overvalued in the world marketplace, it is now significantly undervalued, with positive and negative impact on Australia’s exports and imports;
A recognition that Australian military dominance in South-East Asia has eroded comparatively, and will continue to slip compared with some of its neighbors, while at the same time the country will face significant — and different — demands on its Armed Forces;
A recognition that New Zealand, Australia’s traditionally closest ally, is imploding politically and socially in many ways, with some 60 percent of its university graduates leaving the country each year. New Zealand could, if present emigration trends continue, return to being a Polynesian country within 50 years, leaving Australia as the sole “Western” country in the region. And in defense terms, New Zealand’s uninspired economy has meant that the country is no longer a factor in regional military affairs. Asian and Middle Eastern immigration trends into Australia are also transforming the Western character of Australia substantially;
A recognition that a possible break-up of Indonesia could have profound, long-term and negative consequences for Australian security;
A recognition of the growing economic and strategic influence of both India and the People’s Republic of China (PRC), and the possible negative aspects of these phenomena, their mutual hostility (and the ramifications of that competition on the region), and the potential for competition — as well as possible improved ties — with Australia;
Recognition of the growing instability in Papua New Guinea and an arc of other Melanesian states, such as the Solomons and Fiji; etc.

The underlying fact is that Australia is in the midst of a region which is increasingly unstable and unpredictable, and, at the same time, it cannot afford to place absolute reliance on any ally for significant military-strategic support. That does not deny the ongoing cooperation and friendship which Australia has with the US, in particular, and that is good for the time being. But in a crunch, Australian strategic planners feel that it would be imprudent to assume that the US could be in a position to provide the kind of military aid which it provided in World War II. Even in World War II, US involvement in supporting Australia was part of the broader US campaign against the Japanese Empire; it was not altruistic support of Australia.

In the face of all this, the Australian Defence Forces are among the most professional in the world. But this cannot by itself compensate for the fact that, to get the current and planned sophisticated systems for the ADF, the Defense Department has been forced to cut into the support tail of the Armed Forces. Australian defense planners are fully aware that the success of the ADF in intervening during 1999 (until now) in East Timor was very much due to good luck and the fact that the Indonesian Armed Forces (TNI) did not react negatively.

And despite the international perception that the TNI was the cause of much of the problem in East Timor in the period leading up to the August 1999 independence referendum and subsequent INTERFET United Nations intervention, led by Australia, many senior Australian defense officials pay tribute to their Indonesian counterparts for helping to manage a responsible transition in East Timor. Australian military diplomacy has been significant in the region and, with the visit in June 2001 to Australia by Indonesian President Abdurrahman Wahid, bilateral relations are beginning to strengthen. Pres. Wahid’s visit was basically only possible because the Indonesian President’s domestic position was so bad that a visit to Australia — regarded by many Indonesians as the instrument of their loss of East Timor — could not worsen his position. So, instead, the visit helped restore normalcy to the relationship.

Australia has, since 1986, moved the focus of much of its defense effort into the Indian Ocean sphere, and not a moment to soon, for that is where the future situation will be most dynamic. And it is the area through which Australia must trade. Australia’s defense forces are also more advanced than most in terms of joint operational capability, making them more viable and effective than most. But the forthcoming regional changes are so profound that even more radical thinking will be necessary for Australia to cope as a small state among giant neighbors.

The Howard Government had public support after the E. Timor intervention to significantly upgrade defense spending, but it failed to do so. It also failed to embrace New Zealand into a unified defense umbrella when it had the chance. Beazley’s approach is likely to be interesting.

July 9, 2001

Australia Invites Tenders for Replacement of 15 Fremantle-class PBs

Australian Minister of Defence Peter Reith on July 8, 2001, announced a Request For Tender for replacements for the Royal Australian Navy's (RAN) 15 aging Fremantle-class patrol boats, with an anticipated budget of up to A$450-million (US$225-million) to Australian Industry. The Fremantle-class patrol boats been in service almost 25 years and were becoming increasingly difficult to maintain.

Mr Reith said that the new vessels would continue to provide vital operational training for RAN personnel "at the front line of Australia's defenses against people smuggling, illegal fishing, the narcotics trade and breaches of Australia's quarantine regulations". The RAN contributed 1,800 patrol boat days each year to Coastwatch operations protecting the Australian maritime zone.

Minister Reith said that the Government's preference was to have the new patrol boats constructed in an existing shipyard in Australia, and it specified that they would be supported and maintained in Darwin and Cairns. This would seem to give the advantage in tendering to NQEA, based in Cairns, which originally produced the Fremantle-class vessels.

The Government was keen to pursue this project under private financing arrangements. The invitation to tender would therefore seek bids under a privately financed arrangement or direct purchase by the Government. It was expected that a single business entity would take responsibility for not only supplying the patrol boats, but also maintaining and supporting them for the duration of their 15-20 year life span.

The draft Request for Tender documentation would be released shortly for further comment by industry before it is finalized and formally released in September 2001. The replacement patrol boats were expected to come into service from late 2004.

Reith to Leave Parliament: Defence Minister Peter Reith on June 29, 2001, announced that he would not stand for re-election at the national general elections due to be held before the end of 2001. Although he did not say so, GIS sources confirmed that his decision had been made following the publication of polls which had, several months ago, shown that Mr Reith stood no chance of being re-elected to his Parliamentary seat. He, and the Liberal Party, had invested heavily to reverse the poll trends, but to no avail, with the Waterside Workers Federation actively funding a Labor Party candidate against him. Mr Reith's previous Government portfolio had seem him take an active, and very successful, rôle in crushing the dock unions in Australia.

July 9, 2001

Australia Names New Defense Postings

Admiral Chris Barrie, Australian Chief of the Defence Force, on July 6, 2001, announced the following two-star appointments within the Australian Defence Force:

Commander Australian Theatre (COMAST): Rear Admiral Chris Ritchie;

Head, Capability Systems: Brigadier David Hurley (on promotion to Major-General);

Director-General, Coastwatch: Commodore Marc Bonser (on promotion to Rear Admiral);

Head, Defence Personnel Executive: Rear Admiral Russ Shalders.

These appointments were scheduled to take place in July and August 2001.

RADM Chris Ritchie takes over from Air Vice-Marshal Robert Treloar who had served as Commander Australian Theatre over the past two years, in particular as the Theatre Commander for Australia's leadership of the INTERFET coalition force in East Timor.

The present Head of Defence Personnel Executive, Major-General Simon Willis, was commencing an intensive period of preparation "in anticipation of him taking up the ADF's senior representational post overseas (pending host country approval)". This almost certainly means that he would taking over from RADM Simon Harrington as Australian Defense Attaché in Washington DC.

July 9, 2001

Australian Defence Department Announces Formation of Captive, "Independent" Strategy Think-Tank

Australian Defence Minister Peter Reith on July 5, 2001, announced the appointment of the first governing Board of the Australian Strategic Policy Institute (ASPI). He said that ASPI would be a center of expertise for the provision of policy-relevant research on defense and strategic issues, but the new institute's birth had been delayed by concerns within the Australian defense community that it would merely recycle the opinions of the same people already in the defense policy arena and who are dependent totally upon Defense Department funding for their livelihoods.

One very senior Australian policy official told GIS: "The stated aim of ASPI was to create an independent voice to help shape Australian strategic policy formulation, but it now seems that it will not be independent, it will be expensive, and unnecessary, despite the fact that the people involved are all of a high caliber. It seems unlikely that it will do anything other than move people from one building to another, and add another layer of expenses."

Another fully-independent non-profit think-tank, the Centre for International Strategic Analysis (CISA) was established in 2000 in Perth, Western Australia, and had already begun providing extensive policy analysis support for the Australian Government and industry. That organization also had Federal and Western Australian State Government contracts and support, but it was clear that several key figures did not want to move away from the Canberra area — the capital — with ASPI will be located.

Defence Minister Reith said that the institute would provide the Australian Government with an alternative strategic advisory forum which could challenge advice from established bodies within the strategic environment.

The Board would include the personal nominees of both the Prime Minister and Leader of the Opposition. The Secretaries of the Departments of Defence and Foreign Affairs and Trade would serve on it in an ex-officio capacity.

The Board would ostensibly be independent of Government, although all of its funding would be derived from the Government. According to Mr Reith, its members represented experience, expertise and excellence across a range of professions including business, academia, and the Defence Force.

The first Chairman of the APSI would be Professor Robert O'Neill, AO, a distinguished Australian academic who was currently Chichele Professor of the History of War at Oxford University and Chairman of the Council of the International Institute of Strategic Studies (IISS) in London.

The other Board members are:

The Hon Jim Carlton, AO
Mr Carlton is the nominee of the Prime Minister. He recently retired as Secretary General of the Australian Red Cross Society. He served as a Minister in the Fraser Government and as Shadow Minister for Defence from 1989-90.

Major General Adrian Clunies-Ross AO, MBE
Major General Clunies-Ross had a distinguished career in the Army and is now Chairman of the Australian War Memorial Council. Last year he participated on the White Paper Community Consultation Team for Defence.

Mr Des Moore
Mr Moore served in Government for many years, reaching the position of Deputy Secretary in Treasury. He is currently Director of the Institute for Private Enterprise in Melbourne, and before that was Director of the Institute of Public Affairs.

Mr Stephen Loosley
Mr Loosley is the nominee of the Leader of the Opposition and member of last year's Community Consultation Team for the Defence White Paper. Mr Loosley was elected to the Australian Senate in 1990 and retired in 1995. He is now a partner with Price Waterhouse Coopers.

Senator Jocelyn Newman
Senator Newman has been in the Senate for 15 years representing Tasmania. During her distinguished career Senator Newman has been actively involved in Defence issues in both Government and in the Shadow Ministry, as well as through Senate Committees.

Dr J Roland Williams, CBE
Dr Williams recently retired as the Chairman and CEO of Shell Australia. He is Chairman of the Institution for Chemical Engineers, Chairman of the Advisory Council to the Centre for Energy and Resources Law, University of Melbourne, and President of the Business /Higher Education round table.

Dr Ashton Calvert
Dr Calvert, the Secretary of the Department of Foreign Affairs and Trade, will serve on the Board in an ex-officio capacity.

Dr Allan Hawke
Dr Hawke, the Secretary of the Department of Defence, will serve on the Board in an ex-officio capacity.

With the Board appointments completed, ASPI would now be established as a separate legal entity, incorporated as a company limited by guarantee. It would be ready to commence operations early in the second half of 2001.

January 13, 2000

Concern Over Stability in East Timor as INTERFET Gives Way to UNTAET

EXCLUSIVE. By Gregory Copley, Editor, in Australia. Very senior sources in Australia’s defense and foreign policy establishment are privately expressing concern over the future stability of East Timor as the United Nations international intervention force, INTERFET, gives way to the United Nations Transitional Administration in East Timor (UNTAET) and UNTAET’s peacekeeping force from the beginning of March 2000. The sources highlighted a wide range of concerns, but particularly the fact that UNTAET would not have forces of sufficient resolve to handle crises as they arose.

"We could not have achieved anything like the progress we have made had it not been for the fact that we were able to persuade the US Government to put pressure on the Indonesian Government to allow Australia to take the initiative to lead the INTERFET force into East Timor," one senior Australian military source said. Significantly, this was only made possible by the fact that Australian political leaders took the decision to release very sensitive human intelligence (HUMINT) to the US Government to demonstrate the reality of the situation in Indonesia generally and in East Timor in particular.

Under the terms of the UKUSA Accords, Australia and the US (with the UK and Canada) routinely exchange sensitive communications intelligence (COMINT) and signals intelligence (SIGINT), but this exchange formality does not embrace all other forms of intelligence, particularly HUMINT. Once the Australians took the decision, however, to release the sensitive data on Indonesia to the US, Washington acted promptly to intervene in the situation, allowing Australia to spearhead the UN INTERFET force. The US pleaded an inability to further support the force with extensive deployments of other military assets on the basis that "40 percent of US deployable forces were tied up in Kosovo".

Once landed in East Timor, the Australian force took the decision to deploy its forces whereever the Indonesians had concentrated forces. "We took the view that if the Indonesians had put forces in a certain place, there must be a reason for it, and we wanted to be there to monitor them," one senior military source said. This proved invaluable, because the Indonesians had taken the view that INTERFET would "control the daylight", but that they, the Indonesian Armed Forces, would operate effectively at night. "What the Indonesians did not realize was that 100 percent of the Australian forces were night-vision-equipped," and whenever they would send out night patrols we would be there to question and monitor them.

The sources indicated that, early in the INTERFET deployment, there were far more clashes with the Indonesian-backed pro-Indonesia militias than were reported in the media. "We moved quickly to demonstrate resolve and capability," one source said. "And this proved very effective."

"We have now established that the Indonesian Government has ceased paying for the wages and support of the militia, but this has merely meant that they have turned to brigandage and extortion to stay in business," the source said. "They are now preying on the civilian population, where they can, despite the fact that the population is basically poverty-stricken."

Australian sources indicate that there remain some 200,000 East Timorese refugees remaining in West Timor, and that this will represent a major logistical and security problem for UNTAET.

The Australian sources said that the success of INTERFET was based on the fact that, regardless of overall rules of engagement, Australian, New Zealand and British forces within the force were prepared to take initiatives, militarily, to secure the peace and defend the East Timorese. Most of the British forces, other than a few Gurkhas, have now been withdrawn from INTERFET. The New Zealand component, one of the most effective in INTERFET, has begun winding down largely because New Zealand deployed 100 percent of its deployable capacity, without any rotation capability, and it was necessary to begin sending them home.

"One of the more effective units has been the Brazilians," an Australian Army source said. "They have been extremely professional and willing to take initiative. However, the Pakistan Army component has absolutely refused to take any initiative against the Indonesians, even when it has been absolutely necessary, on the basis that they would not take action against their Muslim brethren. The Philippine Army units have similarly refused to act against the Indonesians based on the fact that they do not want to disturb bilateral relations with their neighbors."

UNTAET’s peacekeeping force, which takes over from INTERFET, will be led by the Philippines, with the Australians in number two position. However, Australian military officials believe that, provided they can sustain enough troops in UNTAET, something close to 2,000 troops, they will be able to act virtually independently of the overall UNTAET command, and to maintain strategic deployment positions so that they can effectively suppress militia activity. There is real concern that once INTERFET has been removed, the militias will resume aggressive activity, preying on the civilian population.

An Australian Foreign Affairs Department source said: "There is no question but that the Indonesian Government has done a better job than we have in winning support within South-East Asia since the East Timor operation began. This does not help us in securing the East Timor situation, although we ourselves need to ensure that we get back to a good and normal relationship with Indonesia as soon as possible. The sooner East Timor becomes a forgotten issue, the better."

January 13, 2000

Australian Prime Minister Considering Changing Foreign Affairs Portfolio

EXCLUSIVE. From Gregory Copley, Editor, in Australia. The Australian Prime Minister, John Howard, is considering replacing Foreign Minister Alexander Downer with the present Treasurer, Peter Costello. It is understood that Mr Costello, who has admitted that he is a candidate to replace Howard as Liberal Party leader, has been offered the post. Mr Costello is regarded as the most effective policy spokesman in the Howard Government, and, in the long-term, Foreign Affairs experience would help in his quest for the party (and national) leadership.

However, it is clear that, while Peter Costello would add credibility to Australians diplomat position, and add a new face to Australian policy in the wake of immense damage to Australia’s position in the wake of the East Timor intervention, it would also remove him as an immediate challenge to the Prime Minister in the party political sense. The portfolio of Foreign Affairs virtually isolates the minister from domestic policy matters and is traditionally seen as an impossible position from which to launch a coup against the party leader.

This may be a major factor in Prime Minister Howard’s offer of the prestigious portfolio to Costello. If Mr Costello accepts, then it would demonstrate, as many believe, that he lacked the "fire" to mount a challenge to Prime Minister Howard’s leadership. It would also strengthen Mr Howard’s leadership and give Australia a new momentum in regional foreign relations. Ultimately, however, it would leave the Howard Government more exposed to defeat at the next elections.

There is some suggestion that Mr Howard might, if he has the nerve, call an early election, in 2000, an election he could probably win. If he delays until 2001, it is likely that the economy will be in worse shape, with declining productivity and inflation induced by the new Goods and Services Tax (GST: a new Federal sales tax) eating into his Government’s popularity.

November 3, 1999

Australian Vote on Republic Has Strategic Ramifications

Analysis. The referendum on November 6, 1999, on whether Australia would transform from its present status as a federal constitutional monarchy to a federal republic has significant strategic overtones for the stability of Australia, and even for its unity. This fact has gone largely unnoticed internationally, and particularly in the US where the Australian referendum has been viewed as an "inevitable" passage toward Americanness. As it transpires, a poll yesterday, November 2, 1999, indicated that the referendum may not pass, preserving the present configuration of a constitutional monarchy, but the matter remains an open issue, and with it the question of Australian unity.

The present structure of the Australian federation is such that each of the states — Western Australia, South Australia, Victoria, Tasmania, New South Wales and Queensland — is explicitly a sovereign constitutional monarchy, each recognizing Queen Elizabeth II as sovereign. The federation as a whole, which includes those states as well as the Northern Territory and the Australian Capital Territory, then recognizes Queen Elizabeth II as Queen of Australia. The sovereign is not recognized in her (or at some other time, his) capacity as Queen (or King) of the United Kingdom, but in a totally separate capacity as sovereign of Australia.

Australia on March 3, 1986, passed the Australia Act, or the Act in Australia, which broke the Australian monarchy from the British, although the person of the sovereign are one and the same. In Australia, the sovereign is theoretically represented by the Governor-General, who is recommended to the sovereign by Parliament. In reality, the Governor-General acts on the sovereign's behalf and in accordance with the Australian Constitution. Thus, in reality, the Governor-General often acts first and advises the sovereign later. And in reality, then, it is the Governor-General who is the guardian of the Constitution.

Within each of the states, a Governor, recommended for appointment by the sovereign by the state parliament, acts as head-of-state, and signs acts of parliament into law and convenes or prorogues parliament, as is the case in the Federal parliament.

The referendum promotes the concept of transforming Australia into a republic. However, in reality, if the federation is effectively dissolved by changing the structure of the federation, the states would theoretically be free to go their own way as sovereign states. Western Australia threatened in 1934 to secede from the federation, as it is constitutionally entitled to do, but Canberra threatened to use Federal troops to prevent the secession. The current Premier of Western Australia several years ago called for the return of the documents of secession from the Western Australian Agent-General in London [the 1934 papers had gone there for presentation to the House of Lords]. So it is conceivable today that Western Australia and Queensland could opt to retain the Crown when other states voted for a republic. That would leave the option of:

Withdrawing from the Federation;
Remaining constitutional monarchies within a federal republic; of
Bowing to pressure to become republics themselves.

The leader of the (Labor Party) Federal Opposition, Kim Beazley, is a Western Australian who opposes the break-up of the federation and, despite private sympathy for the fact that the constitutional monarchical system has worked well for Australia ["if it ain't broke, don't fix it"], has lobbied hard in recent weeks for the republic.

With four days to go before the referendum on Saturday, November 6, 1999, the pro-republic newspaper belonging to Rupert Murdoch, The Australian, published the poll showing 54 percent of the electorate of 12.3-million voters were against the proposed republic, while 42 percent were in favor. There was a slight swing, however, towards the republic compared with another survey by the same pollsters, Newspoll, taken a week earlier. In that poll, there was 41 percent support for a republic and 56 percent in favor of retaining the Australian Crown.

If a republic was selected, the Queen and her representative in Australia, the Governor-General, would be replaced by a president elected by a two-thirds majority of both houses of Parliament. That is, in fact, the sticking point for many voters. The distrust of politicians is so high that many otherwise pro-republicans would rather stay with the monarchy than have politicians vote for a president.

Australian Labor Party (ALP) leader Kim Beazley appealed to republicans who wanted a directly-elected president not to ignore Saturday's poll. He said that the ALP would hold a second referendum on a direct-election proposal if it won the next election in 2001.

Prime Minister John Howard, a monarchist, said, however, that if there was a yes vote on November 6, 1999, there would be "no hope" of further change. Mr Howard also said that his Government would adopt a unified position on constitutional matters if the referendum was defeated, indicating he would require the Government to adopt a pro-monarchist stance. At present, members of his conservative Liberal-National Party coalition Government are not required to adopt a party line on the issue, and some senior ministers, including the Deputy Prime Minister, are pro-republican.

The extent of extreme sentiments for or against the republic or monarchy are significant in some sectors of Australian society, and it should be expected that the issue will be divisive for some time, regardless of the outcome of the referendum. It is not inconceivable that a move to a republic could presage a break-up in the longer-term of the Australian federation, even though most US analysts remain unaware of this sentiment. — G. R. Copley.

© 2013 International Strategic Studies Association. ISSA does not warrant or assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed.