Australia’s Role in the Indo-Pacific’s Shifting Power Dynamics

David Morris

Australia has become a flashpoint in the new geopolitical contest between China and the “West.” Alleged cyberattacks, political influence operations, and economic coercion by China provide salacious headlines. Australia is pushing back, banning Huawei, resisting China’s aid to the South Pacific, and adopting a more aggressive military posture. Trust in Australia’s continued economic interdependence with China is collapsing, but, at the same time, continuing to outsource its security to an increasingly erratic United States appears to be a risky bet. A new, more independent Australia may yet emerge from the current geopolitical shift, which will axiomatically require deeper partnerships with its regional neighbours to shape a more stable Indo-Pacific. Australia may not face a choice between the US and China as both major powers perceive it but may rather finally develop a grand strategy for living with Asia. This may require Australia to re-evaluate itself, as it is, rather than how it once wished to be.

Australians have not traditionally given much thought to geopolitics. Despite being less than half a per cent of the world’s population, Australians have a whole continent to themselves at the end of the Southeast Asian archipelago, distant from the world’s traditional points of conflict, and are fortunate to have enjoyed almost uninterrupted peace in modern times. Australia was famously described as the “lucky country,”1 abundant in natural assets, wealth, and social capital, and generally well governed by high-quality institutions. The phrase was intended to be ironic, however, coined to reflect on Australia’s generally mediocre leadership. Despite presiding over 12% of the world’s surface, a territory rich in resources, and a remarkably successful social model based on a blend of forward-looking egalitarianism and liberalism, Australia has never formed an independent identity or grand strategy to stake its position in the world. Initially, formed as a dominion of the British Empire, Australia waged no battle to create its nation, it evolved through democratic gradualism and continued to see itself as a cultural outpost rather than a new world.

In the absence of a grand strategy to secure its good luck, Australia has consistently gone to war in support of its “great and powerful friends” to demonstrate its loyalty in the hope that such loyalty will be returned should Australia ever be directly threatened. So persistent is this loyalty that, even after the failure of the British Empire to defend Australia in World War II, loyalty was simply transferred to the US from 1941 onwards. This dependence syndrome, which has deep cultural and military roots, sustained a cultural gaze that skipped over the neighbourhood and remained firmly focussed on the United Kingdom and the US. After supporting independence for Indonesia in 1945, few Australians learned the language or did business with the fourth-largest nation in the world to its immediate northwest. After giving independence to its former colony, Papua New Guinea, in 1975, most Australians barely gave the young nation a second look despite a massive development aid relationship.

From time to time in the post-war era, Australia demonstrated an appetite to play the role of “middle power,” engaging and partnering with a broader range of partners than its traditional “great and powerful friends” to pursue its interests. Australia formed coalitions that were influential in peacekeeping, arms control, trade negotiations, and in other areas that shaped its environment, with its influence, to be sure, bolstered by the US-led rules-based

order. However, Australia’s motivations and priorities were inconsistent, flipping whenever governments changed between multilateralism and bilateralism, regionalism, or nostalgia for an Anglosphere. Its engagement with nations in its immediate region, the world’s most diverse range of societies and economies stretching across Southeast Asia and the South Pacific, continued to be erratic. While the composition of Australia’s population changed over the course of recent decades due to increasing immigration, and the country ended up having a remarkably cohesive multicultural society, it barely noticed and commonly misunderstood its neighbourhood.

Greater attention was paid to the great economies of Northeast Asia where Australia found its prosperity in modern times by pragmatic economic interdependence, first with Japan and, more recently, China. Indeed, over recent decades, Australia has become the most economically integrated with China of all developed economies, given the strong complementarity between the two. Not only did China depend on Australian resources for its economic modernisation, but Australia was also a major destination for Chinese investment, migrants, tourists, and students. In turn, Chinese demand fuelled a remarkably strong Australian economy, at least until COVID-19. In 2017, Australia, with only twenty-five million people, generated the fifth greatest wealth in the world.2 Nonetheless, the Australia–China relationship remained largely transactional, demonstrated by its steady deterioration in recent years as anxiety about geopolitical competition engulfed Australian domestic politics and the US global strategy.

In the last few years, the narrative, and indeed the power balance, changed. Despite commonly held Western expectations that China was on a path to liberalisation, China under Xi Jinping doubled down on authoritarianism at home. Abroad, it flexed its muscles at a time of apparent Western weakness after the (Atlantic) global financial crisis. China’s militarisation of disputed formations in the South China Sea, flouting the UN Convention on the Law of the Sea, led to widespread fears that China would undermine the international rules-based order. Its Belt and Road Initiative appeared to geopolitical analysts to be more than benign infrastructure connectivity projects and a likely immense play for asymmetric power through debt diplomacy and potential new military bases across a vast geography.3 Notwithstanding the normative bias of much of the narrative (the US’s flouting the Law of the Sea is rarely cited, nor the history of conquest and plunder by other rising powers), the Chinese Government failed to generate “soft power” despite clumsy efforts to do so. With its firm grip on power, the Chinese Communist Party may have underestimated how its more assertive actions would be interpreted in the West, however, because of the opaque nature of its political system, we are unlikely to ever know.

Australia, with its large Chinese community, its deep economic ties, and its pool of China expertise, might have been expected to take a nuanced approach in response to develop a strategy, as advocated by others in Asia,4 to engage rather than confront China. Seasoned observers have indeed encouraged engagement over confrontation.5 There may have been such an opportunity in Xi Jinping’s posturing as a champion of globalisation and multilateralism, while the US appeared to be walking away from the institutions it had built for global governance. However, instead of pursuing nuance, Australia poked the dragon. Whether it was provoked to do so is difficult to establish from information on the public record. The intelligence community regularly fed Australia’s sensationalist media on allegations of cyberattacks, espionage, political influence operations, and military base plans. The ensuing China panic provoked a storm of sentiment directed against China.6

Australia’s China panic developed as its traditional “great and powerful friend,” the US, switched from constructive engagement with China to strategic competition, advocating for decoupling key industries, resistance to China’s Belt and Road Initiative, and for a game of chicken with the Chinese military in the South China Sea. The narrative that Australia must “choose” between China and

NUMBER OF PROJECTS 6034

Bank

TOTAL AID COMMITTED 8160.00

TOTAL AID SPENT 2250.00

TOP 5 RECIPIENTS

Papua New Guinea

Oceania, regional

Solomon Islands

Marshall Islands

Micronesia 6070.00

557.98

344.22

197.12

183.18

TOP 5 RECIPIENTS

Papua New Guinea

Oceania, regional

Fiji

Vanuatu

Solomon Islands 653.05

286.12

241.30

237.73

TOP 5 DONORS

China

Australia

Asian Development 202.77

World Bank

New Zealand 4780.00

1000.00

733.75

297.31

295.60

TOP 5 DONORS

Australia

New Zealand

Japan

China

Unites States 855.67

221.24

187.52

171.69

157.80

the US became more pronounced than in other countries that are interdependent with both major powers. In Australia, interdependence is more commonly described as “dependence.” Unlike most nations, Australians do not yearn for national independence. Australia being geographically and culturally distant from its traditional “great and powerful friends,” id’s dominant international relations narrative is “fear of abandonment.”7 This is also reflected in Australia’s formative events as a nation: its continued dependence in a federation (when six colonies became a self-governing “dominion” of the British Empire), the White Australia Policy (the founding philosophy of racial purity that set infant Australia against its neighbourhood and its original inhabitants), and the ANZAC (Australian and New Zealand Army Corps) myth (suggesting simultaneous “mateship” and loyalty to the Empire, even in unwinnable and indefensible battles). These three pillars perpetuated the fiction that Australia was part of an enduring empire and also embedded a notion—still culturally powerful—that only AngloAustralians can be truly Australian. Those who, after a century of modernisation, liberalisation, and internationalisation, still subscribe to these founding myths continue to imagine Australia as a small, dependent country, unable to make its own way in the world.

Even Australia’s democracy—one of the world’s most stable and resilient one on any measure—can be imagined to be under threat. After the apparent Russian influence in the 2016 US presidential election, the narrative of “foreign influence” was seamlessly picked up in Australia when some Australian politicians were found to be soliciting foreign donations from China. Subsequent legislation to protect against foreign influence was unexceptional (and welcome). However, it was wielded to create a media storm of blame, led by the then–prime minister, Malcolm Turnbull, who, under siege from malcontents on his right wing, claimed to be “standing up” to a China threat. In fact, conservative parties had for many years resisted calls for greater transparency around political donations and greater accountability in the institutions of Australian democracy, such as the creation of an independent commission against corruption. Few compelling examples of actual foreign influence have subsequently been exhibited on the public record (as opposed to clumsy Chinese public relations exercises), but the China threat narrative has proved politically valuable ever since. Notably, in the midst of an embarrassing lapse in border security that allowed a cruise ship full of COVID-19 cases to disembark in central Sydney, the Australian Government ramped up demands for an independent inquiry into the origin of the virus. The call appeared to have all the makings of a pure public relations exercise in the absence of any apparent diplomatic preparation, unlike the ultimately successful European Union efforts for a more realistic World Health Organisation inquiry into the pandemic.

Meanwhile, the Australian government embarked on a redrawing of the map, reimagining Australia’s position in the world. Its 2017 Foreign Policy White Paper8 abandoned the language of the last half century, positioning Australia to benefit from the opportunities of engagement with the Asia-Pacific. That region had been envisaged as a set of relationships along a vertical axis, from Northeast Asia, through Southeast Asia, to Australasia from where most of Australia’s trade, tourists, migrants, and students flowed. In that set of relationships, China and Japan were of central economic importance, while Australia’s preferred regional architecture encompassed the US as the all-important Pacific balancer, given the uneasy coexistence of some actors in the region. Australia’s advocacy of an AsiaPacific community perhaps reached its climax with its role in creating the Leaders’ Meetings of the Asia Pacific Economic Cooperation (APEC). However, reference to the Asia-Pacific was eliminated in the 2017 White Paper and from the government’s foreign and security policy language ever since. Asia had come to signify the rise of China and, with the US shifting to a quasi-containment/quasi-confrontation policy, a new binary concept was invented that all but deleted the discussion of Asia. The name Indo-

Pacific9 was created, in close alignment with the US and Japanese language, which described the maritime region across a semicircular arc of actors, many of which happened to be in strategic competition with China, from the US to India. The era of geoeconomics appeared to be over, and a new era of geopolitics had begun.

With this new zero-sum geopolitical outlook, China’s growing economic engagement with countries in the region (no matter how the region was labelled) became framed no longer as fuelling regional growth but threatening regional influence, power, and, ultimately, dominance. Ironically, it has taken China’s rise to focus Australian eyes on the region in its immediate neighbourhood: the small, aid-dependent, and potentially unstable nations of the South Pacific. While Australia maintains defence superiority in its immediate region, its military–intelligence community has an understandable concern about any erosion of that superiority. For Australia, the gravest threat to the South Pacific would be the establishment of a Chinese strategic presence. For the Pacific island countries, the most severe threat is climate change, and, apart from four that have diplomatic relations with Taiwan, most welcome Chinese aid and investment. Indeed, ten Pacific island countries have joined China’s Belt and Road Initiative, keen on infrastructure connectivity to the major markets of East Asia and welcoming China’s less stringent conditions for finance.10

In recent years, Australia has announced a Pacific “step-up,” an array of new initiatives for the Pacific islands region to strengthen security cooperation, although it continues to resist stronger action on the issue of major concern to its neighbours, climate change.11 A key risk in Australia’s approach is its tendency to perceive the island countries as pawns in a geopolitical game rather than to engage with the needs and perceptions of the people of the region themselves. This was graphically illustrated when a hawkish member of the Australian Government lashed out at Chinese-financed and -constructed “roads going nowhere” in the Pacific.12 The move backfired, as it was followed by a series of blunders in which Australian ministers appeared condescending or dismissive of islander concerns, since the comments were widely interpreted as attacking the decision makers of the Pacific

China’s friends and relations in the Pacific

Palau Marshall Islands

Papua New Guinea Nauru

Solomon Islands

Vanuatu Tuvalu

Fiji Kiribati

Samoa

Tonga Niue Cook Islands

Recognises the People’s Republic of China Recognises the Republic of China (Taiwan)

Australian prime minister Scott Morrison and Indonesian prime minister Joko Widodo in a 2018 meeting

who had solicited the Chinese support for new infrastructure. Australia’s record of supporting infrastructure in the region has been controversial despite its massive development aid budget for governance, health, and other services, often delivered by Australian consultants. In resisting the extension of the Belt and Road Initiative to the region, therefore, Australia risks weakening its own influence rather than achieving its goal of weakening China’s.

Most spectacularly counterproductive were the claims of planned Chinese military bases in the South Pacific. Australian intelligence agencies appeared to be the source of media stories in 2018 which claimed that a Chinese military base was planned for Vanuatu, a small Pacific island nation to the northeast of Australia. The claim was swiftly denied by the Vanuatu government.13 There were claims by unnamed Australian officials that China could “seize” a wharf complex and convert it into a base aligned with an emerging “debt trap” narrative, yet subsequent investigation revealed that there was no debt-to-equity clause in Vanuatu’s funding agreement for Luganville wharf14 and neither was Vanuatu at risk of debt distress,15 although the nation had suffered significant political instability. Australian fears of potential Chinese bases in the South Pacific have persisted. Based on publicly available information, the claim that China was planning a military base in non-aligned Vanuatu appears unlikely, and yet consistent with a longstanding tradition of intelligence-leaked media “revelations” in earlier decades of planned Libyan or Russian bases in the South Pacific.16 Former Australian prime minister Paul Keating subsequently intervened in Australia’s 2019 election campaign to issue a veiled warning to intelligence heads not to play politics.17

There has been, as yet, no step-up in Australia’s relations with the nations of Southeast Asia. Indonesia, the fourth most populous nation in the world and the largest Muslim nation, straddles Australia’s northern approaches. Historically, Australia supported Indonesia’s struggle for independence, but mutual indifference has endured for long decades. The two have no competing geopolitical interest and could form a closer strategic relationship to contribute to the stability in the region, although Indonesia is likely to resist being drawn into a binary US–China competition. More broadly, the Association of Southeast Asian Nations (ASEAN) will seek coexistence and engagement with China rather than confrontation or conflict. Singapore’s prime minister Lee Hsien Loong, like other regional leaders, emphatically rejects being forced to choose between the US and China.18 Australia’s potential to more deeply cooperate with ASEAN will depend on whether it is perceived as contributing to, rather than unsettling, that consensus.

Australia’s relationship with Japan has deepened over many decades, and further collaboration is likely with Japan’s doubling down on a strategy to maintain a “free and open IndoPacific” in alignment with well-governed partners including the Republic of Korea, Taiwan, Vietnam, Singapore, Australia, and New Zealand.19 Meanwhile, regional economic integration efforts continue, with most countries in the old Northeast Asia–Southeast Asia–Australasia vertical signing up for further trade liberalisation and new standards in key industries under the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, both of which build on open Asian regionalism of the pre-COVID-19, globalisation era.

To date, circumstances have only encouraged gradualism rather than a transformation in Australia’s security (as opposed to economic)

engagement with its neighbours. Ironically, prospective future actions by its ally, the US, could change that. In a deteriorating US–China strategic contest in the Pacific, future points of conflict include unpredictable events on the Korean Peninsula, conflict over Taiwan, or scuffles in the East or South China Seas. It may not be in Australia’s interests to get involved in any of these, yet the US would expect Australia to do so—and, indeed, the joint military–intelligence facilities in Australia effectively make the country a party to any US operations in the region. This tension is unlikely to disappear.

In almost any conceivable future scenario, Australia will need to diversify its relationships. It will need the option to become less interdependent with China if the geopolitical climate continues to deteriorate and will need to strengthen its trust and interdependence with others, including large powers such as India and Japan, as well as emerging powers such as Indonesia and Vietnam, and small nations located across the region. Working together with the region, Australia is more likely to bolster rules and norms for coexistence and cooperation than to neglect its neighbours.

The above logic seems to appear in the way the Australian government is apparently starting to think. A recent defence update20 announcing new weapons systems and cyberwarfare capabilities was interestingly framed as strengthening Australia’s capacity for self-reliance and as a refocus on Australia’s own neighbourhood. This was a radical departure from the military–intelligence priorities of the last two decades, supporting US adventurism in the Middle East. While not eschewing the US alliance, which continues to enjoy broad support in Australia and is regarded as simply common sense, the shift does reflect a lack of confidence in the reliability of the US in the future after the experience of recent years. Whether this leads to a long-term shift towards a greater diversity of partners, including those in Australia’s neighbourhood, is yet to be seen.

One great untapped asset is Australia’s multicultural population, with highly skilled and educated citizens drawn from across the region and the world, committed to Australia’s high quality, democratic institutions, and global rulesbased order. A generational change is underway, as leaders emerge from these communities who are likely to patiently build a more modern Australian identity that no longer needs to define itself through the eyes of others. On the contrary, Australia can look at the world through uniquely Australian eyes. Rich, politically stable, and socially cohesive as it is, Australia no longer needs to fret about its distance from Europe or America. It can develop confidence as an indispensable actor in Asia—or is that the Indo-Pacific?

In the short term, a powerful normative narrative dominates the Australian discourse, in which China is cast as the villain, and risks are catastrophised as threats—and that is not an encouraging nuance. Strangely, China’s mass internments in Xinjiang, hostage-taking of Canadian citizens, or its other numerous human rights abuses were not featured very much in the narrative. Rather than this, the Turnbull and Morrison Governments have made it a badge of honour to provoke China in areas where evidence is safely confidential and not open to assessment, using a language known to cause acute cultural sensitivity,21 implying blame for a virus outbreak, or assuming a telephone company cannot be trusted (Australia was the first country to ban Huawei on fears that it could theoretically engage in cyberespionage and sabotage). This is a sharp break from the evidence-based, constructive engagement of the last four decades. The discourse has become flooded with authoritative assertions that China is engaged in cyberattacks, economic

coercion, and military base planning. None of these is impossible, and, indeed, China’s actions have begun to look more like a conventional major power’s, and so it is entirely conceivable that China is acting in such a way. Indeed, the US has for decades engaged in cyberespionage, economic coercion, and military bases around the world. Australians, if told they must choose between one major power bully or another, will naturally choose the one that is more familiar and has democratic potential for checks and balances.

Yet the zero-sum narrative is too simplistic, particularly, if its logic leads towards confrontation and perhaps war in the Pacific rather than coexistence based on a new balance. Australia may have long been dependent on seeing the world through the eyes of its “great and powerful” friends, but it just might be beginning to assess things from its own position on the map and the perspective of its strengths rather than its imagined weaknesses. It is manifestly not in Australia’s interests for the region to be dominated by an authoritarian China, but neither is to make itself China’s enemy. Australia’s overwhelming geopolitical imperative is to maintain a stable balance in its region. Neither the US nor China is stabilising influences at this point in their strategic competition. Australia is, therefore, compelled to both strengthen its selfreliance and to work with partners to sustain regional stability. Further policy innovation is likely in the years ahead.

ENDNOTES

1

Donald Horne: The Lucky Country. Angus & Robertson, Sydney, 1964.

2

Global Wealth Report 2017. Credit Suisse. November 2017. <https://bit.ly/30ylsRZ >

3

Bruno Maçães: Belt and Road. A Chinese World Order. Hurst & Company, London, 2019.

4

Kishore Mahbubani: Has China Won? The Chinese Challenge to American Primacy. PublicAffairs, New York, 2020.

5

Peter Varghese: What should Australia do to manage risk in its relationship with the PRC? China Matters. June 2020. <https://bit.ly/3ftwf6n >

Natasha Kassam: Lowy Institute Poll 2020. Lowy Institute. 24 June 2020. <https://bit.ly/3eOBLiw >

7

Allan Gyngell: Fear of Abandonment. Australia in the World since 1942. La Trobe University Press–Black Inc., Melbourne, 2017.

8

2017 Foreign Policy White Paper. Department of Foreign Affairs and Trade, Australian Government. <https://bit.

ly/38WGJZt >

9

Rory Medcalf: Contest for the Indo-Pacific. Why China Won’t Map the Future. La Trobe University Press–Black Inc., Melbourne, 2020.

10

Ralph Regenvanu: “The China alternative” Symposium. Vanuatu Daily Post. 2 March 2019. <https://bit.ly/2DJR0Nf >

11

Erin Handley: Australia accused of putting coal before Pacific ‘family’ as region calls for climate change action. ABC News. 16 August 2019. <https://ab.co/3fzbOFe >

12

Catherine Graue–Stephen Dziedzic: Federal Minister Concetta Fierravanti-Wells accuses China of funding ‘roads that go nowhere’ in Pacific. ABC Pacific Beat. 10 January 2018. <https://ab.co/32diEMF >

13

David Wroe: China eyes Vanuatu military base in plan with global ramifications. The Sydney Morning Herald. 9 April 2019. <https://bit.ly/38ZncYf >

14

Ben Bohane: South Pacific nation shrugs off worries on China’s influence. The New York Times. 13 June 2018. <https://nyti.ms/2Wkif7j >

15

Rohan Fox–Matthew Dornan: China in the Pacific: is China engaged in “debt-trap diplomacy”? DevPolicy. 8 November 2018. <https://bit.ly/2OnILZ5 >; Daniel Kliman [et al.]: Grading China’s Belt and Road. Center for a New American Security. 8 April 2019. <https://bit.ly/308Z1m7 >

16

Gyngell, 2017.

17

David Wroe–Dana McCauley: Sack ‘nutter’ spy chiefs to fix relations with Beijing, Paul Keating urges. The Sydney Morning Herald. 5 May 2019 <https://bit.ly/3ep96AJ >

18

Hsien Loong Lee: The Endangered Asian Century. America, China, and the Perils of Confrontation. Foreign Affairs. 2019/July–August. 52–54.

19

David Arase: After Covid-19, Japan recalibrates its foreign policy. Asia Global Online. 2 July 2020. <https://bit. ly/2ZsbmTt >

20

Defence Strategic Update and 2020 Force Structure Plan. Department of Defence, Australian Government. <https://bit. ly/3j3XrKV > Accessed: 15 July 2020.

21

Caitlyn Gribbin: Malcolm Turnbull declares he will ‘stand up’ for Australia in response to China’s criticism. ABC News. 9 December 2017. <https://ab.co/3evxAbt >