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ABN # 65 648 097 123
Background Brief: Australia’s Debate Over U.S. Rebalancing Carlyle A. Thayer July 6, 2012
[client name deleted] We would like your assessment of the article published in The Age (http://www.theage.com.au/opinion/political-news/defence-ready-to-muscle-up20120706-21mdj.html). ASSESMENT: The Age article is unusual for its length. It captures the spirit of the debate underway in Australia as planning groups meet to prepare for the 2013 Defence White Paper. The major problem is the massive cut in the defence budget, and the lack of clear strategic guidance to formulate a Defence Capability Plan and then the Defence White Paper. The concern is that without strategic direction the Government will expect the Australian Defence Force to undertake roles and missions for which they are not capable. The Defence Minister argues that the 2013 Defence White Paper will provide the strategic guidance. Also there is real concern that Australia will have a gap in submarine capability. The 12 submarines mentioned in the 2009 Defence White Paper cannot be built in Australia in time to close this gap. The costs and arrival date of the Joint Strike Fighters keeps going up and are pushed further into the future, respectively. Australia is losing some of its capability for strategic strike. The Age story focuses on a conundrum: how can Australia be self-reliant in defence and an ally of the U.S. at the same time. If Australia is to be self-reliant, it can make a decision to intervene or not intervene in some South Pacific country undergoing domestic turmoil. In other words, if another East Timor arises a self-reliant Australia should have the capacity to intervene on its own. There were grave deficiencies in 1999 – in sea lift, logistics and intelligence that the U.S. provided. As a U.S. ally, Australia will be expected to join the US in a regional conflict involving China. This is not a conflict that Australia can contribute to significantly in a military sense but Australia need to be interoperable with U.S. forces. Because of current tensions in the South China Sea, Australian defence analysts outside the government are wondering what are Australia’s interests. This has not been articulated by the Government; nor has it been covered in the Australian press. There is a significant view among academic community cited in The Age that U.S. rebalancing and U.S. relations with the Philippines are provoking China
2 Because China has become Australia’s largest trading partner, there is concern that Australia will be drawn into a stoush between China and the U.S. not of its own making. Australia has responded to criticism from Indonesia and China about the rotation of U.S. Marines by inviting the Indonesian military to participate in trilateral HA/DR [Humanitarian Assistance/Disaster Relief] exercises. The Defence Minister has mooted that China will be invited too, first as observer and then as a participant. Assistant Secretary Kurt Campbell caught the essence of this in his address to the recent CSIS conference in Washington, D.C.. The region, and Australia, are fixated on U.S. rebalancing and military rotations. The Obama Administration will now attempt to correct this bias by emphasizing all the other interests the U.S. has in the region. And at the same time, the U.S. will re-emphasize its desire to cooperate with China. In sum, two great debates are underway. The first focuses on budget cuts and how to allocate dwindling resources – to the navy/air force (maritime security) and the army (high end war fighting). The second debate comes with being a dependent ally of the U.S. – how can Australia retain its independence of action and be a loyal ally of the U.S. at the same time. Finally, the current Government will change come the next election. It will be a loyal ally but has not committed itself to restoring the cuts in the defence budget. The Liberal Party is viewed as more sympathetic to the U.S. alliance and defence than Labor. Several of the commentators cited in The Age aspire to return back to government in some capacity. Some of the public debate is designed to raise individual profiles while shaping the agenda for future defence policy. Q1. Do you think China would accept if the Australian and Indonesian Defense Ministers invited them to participate? When will the trilateral exercise occur? ANSWER: Indonesia seems positive that China will accept. But at present the idea of a trilateral exercise has not been officially confirmed. China has not made any statements in public indicating whether or not it would send observers or even participate at a later date. Q2. The current government will change come the next election. You infer that defence cuts will likely be restored is that regardless of Liberal or Labor government? ANSWER: If the Labor Government is returned to office they will stick to low defence budgets. They argued as a matter of principle that this year’s budget had to be balanced. The Defence Capability Plan was just released and it has been synchronized with budget spending. This lists the big ticket items Australia will acquire. The next step is the 2013 Defence White Paper. But before it is produced the government will come out with a foreign policy White Paper on Australia in the Asia Century. This is likely to highlight economic issues over military challenges. If the Liberals win they will likely increase the defence budget. But this year they choose the expedient path of being rather non-committal on what percent of GDP they favour. It it doubtful the changes in defence spending will be drastic or will come quick enough to address some pressing issues – the submarine gap for one.
3 Suggested citation: Carlyle A. Thayer, “,” Thayer Consultancy Background Brief, August, 2012. Thayer Consultancy Background Briefs are archived and may be accessed at: http://www.scribd.com/carlthayer.
Defence ready to muscle up
Published: July 7, 2012 - 3:00AM
It takes the skills of a diplomat as well as those of a soldier to head the Australian Defence Force. So it was startling to hear unusually plain talk from the present chief, General David Hurley, at a low-key event at the Lowy Institute in Sydney one evening last month. Touching on the delicate subject of growing Chinese-US rivalry in the region, Hurley revealed: ''When I am asked by my US counterpart what's my major concern about the relationship between Australia and the US, I say the relationship between your military and the Chinese.'' For this audience, he didn't need to elaborate. Within the defence community there is a high awareness of the increasingly testy cat-and-mouse game China and the US have been playing with each other's ships and submarines in the South China Sea. In May a US nuclear submarine, the USS North Carolina, made a show of surfacing in the Philippines port of Subic Bay after local fishing vessels were harassed by the Chinese navy in the contested Scarborough Shoal fishing grounds. China is increasingly pushing back at US efforts to track its submarines operating off the island of Hainan. One trigger-happy miscalculation fed by a series of cascading misjudgments could bring the two giants, snarling, toe to toe. Former lieutenant-general Peter Leahy, who headed the Australian army for six years to 2008, is watching it all with increasing alarm, urging Canberra to be wary about falling in with US ambitions to maintain ''primacy'' in China's maritime backyard. ''I'm not satisfied that we have fully explained what our own national interests are in resource and territorial disputes in the South China Sea,'' he says. ''My concern is that we are so embedded in the US planning process, we are so interoperable with them, that there's this expectation we will be involved in whatever [the US] does … We have to be careful that doesn't overwhelm our sovereign decisions.'' Leahy, now the head of the national security institute at the University of Canberra, suggests clashes in the South China Sea are the kind of problem the US might more aptly sort out with Asian allies such as South Korea and Japan, rather than Australia. South Korea and Japan, hosts of US bases, are muscling up to China with Aegis anti-missile destroyers, new anti-submarine mini-aircraft carriers and more of their own subs. Japan is quietly rolling out a vast network of seabed sensors and power radars to its west, converting much of its army into a marine-type force and seeking the closely guarded F-22 Raptor fighter from the Americans. South Korea's coastguard has clashed with intruding Chinese fishing fleets and its navy has had a warship torpedoed without warning by China's erratic foster child in Pyongyang. Meanwhile, intrusions by Chinese warplanes, requiring Japan's air force to scramble and intercept, rose 60 per cent last year. Of Australia's putative part in all this, Leahy says: ''Maybe as the Asian century dawns they [the US] need to realise that particular part of Asia belongs to Asia.
''Why don't we say that we will support you as best we can, but it doesn't mean that we're going to be a squadron of the US Navy and a squadron of the US Air Force?'' Hurley curtly dismisses such fears, saying: ''We make sovereign decisions about the national security of Australia.'' In the event of a hot confrontation with China, he concedes, the alliance with the US would be the '' first point of distinction and judgment''. But he adds, ''we are not myopic about this … we have a relationship which is long-term with the US and that's been key in our security for a long, long time. But we are cognisant we need to have positive relations with the other major player in the region, and we work very hard at that.'' Yet critical questions remain about what forces we need into the future - and what we might do with them. Kevin Rudd's much vaunted defence white paper of 2009 justified a recommended doubling of the submarine fleet from six to 12 - at a mooted cost of about $36 billion - on the basis of possible future tussles with ''major power adversaries'' (read China) in the Asia-Pacific. The 2009 white paper also envisaged boosting our amphibious and strike capability, and recommitted to the Howard government's plan for acquiring 100 Joint Strike Fighters, a sophisticated stealth aircraft still under development in the US and dogged by spiralling costs. Together the submarines and JSF aircraft alone will land the country with a bill well north of $50 billion. To pay for it, the white paper guaranteed defence a 3 per cent budget rise each year. Instead the opposite occurred, as minister Joel Fitzgibbon left the portfolio to successors John Faulkner and Stephen Smith while the hawkish Rudd got booted out of the prime ministerial chair for a much less engaged Julia Gillard. Leading defence budget analyst Mark Thomson, from the Australian Strategic Policy Institute, believes the $5.5 billion cut announced in last month's federal budget is just the tip of an iceberg. He says defence has already absorbed nearly $18 billion worth of deferrals, cuts or other internal cost savings in the past three years, meaning an all-up shrinkage of $22 billion. Defence spending as a proportion of gross domestic product will plummet to barely 1.5 per cent this year, its lowest level since the eve of World War II. According to Leahy, this leaves the 2009 white paper lying ''butchered on the floor''. A former intelligence and army officer and now an academic at the University of NSW, Alan Dupont, agrees, saying there's not even a clear narrative around the cuts. ''We don't know what's going to give because the government has not admitted that they can't meet those  objectives,'' he said. In the US the defence community views Australia's say-one-thing, do-another stance with increasing consternation. Patrick Cronin, director of the Asia-Pacific security program at the Washington-based Centre for a New American Security, says: ''From Washington's perspective, we are obviously looking for more defence growth, even at modest levels, so that Australia can afford to be both an active … global partner but also a regional bulwark of support and security.'' In a crisis when Washington was trying to stop China ''dictating'' to other countries, he believes that ''of course the United States would be relying on its closest allies and we would be hoping that Australia would contribute to that''. Fellow American Tom Mahnken, a professor of strategy at the US Naval War College, voices a similar concern. ''The alliance is at a point where … there are opportunities to deepen the alliance and our co-
operation in a whole bunch of areas. And the sad thing about your defence cuts is they will jeopardise a number of areas of interoperability and defence co-operation.'' Mahnken says he hesitates to draw parallels with the Philippines. ''But one of the problems that a country can experience in a competitive environment where it doesn't take defence seriously are some of the things the Philippines is experiencing - rough behaviour from neighbours.'' Both Mahnken and Dr Cronin are primarily concerned that the cumulative effect of the defence cuts will weaken Canberra's ability to acquire the 12 highly capable submarines envisaged by the 2009 white paper a critical element in our long-range strike capacity since their land-attack cruise missiles would replace the RAAF's now scrapped F-111 bombers. Cronin points out that Australia's present and projected new submarines are particularly useful to the US because America's are all nuclear powered, while Australia's are not and can go places where nuclear subs can't - into shallower waters, for example. In the event of the US trying to bottle up China's submarines at ''choke points'' close to Chinese territory in a major clash, suggest both men, Australia would be expected to play its part. A senior ADF officer confirms the US is eyeing the proposed submarine purchase keenly. ''The United States is offering extensive support to us to make the future submarine program a success,'' says Rowan Moffitt, the Royal Australian Navy admiral in charge of the project. ''Because it's in their interests as well as our interest. On the currently published plans that the US Navy has for its submarine forces, and Australia's plans, when Australia reaches a fleet of 12 conventional submarines, we will be one third of the allied submarines in the Southern Asia-Pacific region.'' Conventional submarines such as Australia's also help compensate for a critical chink in the US Navy's armour. US detection systems have trouble picking up modern diesel-electric submarines. ''They can't find them,'' says Jim Duncan, a former RAN engineer who worked on the present Collins class and now represents the German shipbuilder ThyssenKrupp. Thus allied conventional subs continually ''sink'' American carriers in exercises. Tracking and taking out hostile subs would be a key role for US allies in a big conflict. A senior Labor figure believes the dovetailing of our submarines with US maritime strategy is accepted inside the Gillard government. ''It's very much about being able to fit in with the US game plan,'' says this source. ''It's about strategic denial [of Chinese forces' freedom to operate], it's about intelligence gathering capacity of the subs, it's about interoperability with the US. The Americans like our conventional subs, theirs do things that ours can't and vice versa.'' But both Leahy and Professor Dupont worry that overemphasis on maritime supremacy could invite neglect of Australia's army, leaving it to decline as it did before the 1999 Timor crisis. ''The dangers of saying, 'OK, all that Afghanistan and Iraq stuff, we're not doing that any more, we are preparing to combat China in the South China Sea' - that kind of mentality would be extremely destructive of the capabilities of the land forces and would be a real strategic mistake,'' Dupont argues. ''It would be much better in my view to make some cuts to one or two major programs [the submarines or Joint Strike Fighters] and leave everything else as it is.'' Hugh White, a former senior defence official and author of the earlier 2000 white paper, also fears Australia being drawn too tightly into US brinkmanship with China but has a radically different solution. He would vastly increase, not cut, the number of submarines on our wish list, arguing that if Australia is serious about being a ''middle power'' it should be able to stand militarily on its own two feet. That would
mean a defence budget of closer to 3 to 4 per cent of GDP - and 20 or more smaller submarines rather than the 12 large ones the navy wants. ''We won't be a middle power on 2 per cent of GDP,'' he says. Professor White also points out that the army, partly on Leahy's watch, has geared itself up for participation in conflicts further afield than Australia's close region. He queries the purchase of two 27,000-tonne amphibious warfare ships - a third bigger than the old aircraft carrier HMAS Melbourne which are designed for lodging marine-type battalions and their heavy equipment, when he believes a bigger fleet of smaller vessels would be better suited for nearby interventions in small states. Meanwhile, White points out that almost everywhere but inside Australia, the arrival of US marines in Darwin for six-month ''training rotations'' is being viewed as the effective establishment of an American land base here - for direct deployment to conflicts - despite the Prime Minster's declarations to the contrary. And this, too, is being largely driven by Washington's ''strategic pivot'' towards China. General Hurley has underscored the need for ''high-end war fighting capabilities'' to boost our regional influence, and is committed to the kind of military diplomacy, or defence ''soft power'', that now sees an Australian studying inside every single one of Indonesia's military colleges. ''We're also working hard with Vietnam, Cambodia, putting a lot of effort into the strategic engagement in the region.'' Defence Minister Smith, meeting the Indonesian president in Darwin this week, has also flagged a stronger focus on Indonesia in next year's defence white paper. In an era of defence cutbacks in Western economies, notably traditional allies United States and Britain, alliances with less familiar partners are increasingly seen as leverage. Closer ties with Indonesia come with their own dilemmas though, such as whether it helps get the Indonesian military off the hook over questions of reform, including a retreat from the invidious ''territorial'' system of parallel army administration (especially in Papua), and from independent fundraising through military-owned businesses. Official rhetoric from defence leaders continues to underscore ANZUS as our national insurance policy. The Chief of the Army, Lieutenant-General David Morrison, told defence industry leaders recently that Australia had received ''incalculable benefits'' from the alliance, and that commentators who suggested that ''Australia can seek security through some form of armed neutrality'' were guilty of ''wishful thinking''. Meanwhile Labor's defence cuts have opened the way for the opposition to walk away from a largely bipartisan stance on military matters. ''They have rung the siren and the game is about to start again defence is going to be a political football,'' warns the opposition defence spokesman, Senator David Johnston. He dismisses Gillard's promised 2013 white paper as an ''election spinning document'' that will give Smith the cover to avoid hard answers between now and the next election. Liberal colleague Stuart Robert, a former army officer who is the opposition spokesman on defence science and personnel, says the Coalition ''would not have cut and will not cut'' defence. He says the memos sent out by the chiefs of army, navy and air force in the days after the budget cuts reveal there will be serious impacts on training and readiness, such as cutbacks on fuel for naval exercises. ''The military is angry,'' he says. ''They were getting to a point where they were able to do what the nation wanted them to do. Now they are gutted and hollowed out.''
Dupont says the trend is the real worry. ''Right now the ADF is the most professional, best equipped we have ever had. But if this current reduction is sustained over a couple of years? It will have a real impact. And we will become more dependent on the US rather than less.'' White says the more profound question - what does Australia seek to do independently in the Asia-Pacific century? - remains barely grappled with. Some answers may come, ironically, from economists rather than strategists, in the forthcoming white paper on Australia's engagement with Asia being drafted by former Treasury head Ken Henry and the ANU's Peter Drysdale. But Mark Thomson warns against China being the overriding driver. Australia could ''huff and puff and spend 3 per cent of GDP on defence and it won't have a snowball's chance in hell of making any difference to the balance of power in the Pacific'', he says. ''Either the US and China sort something out or they don't. We are mere bystanders in this. There are real jobs for Australia defence-wise to do, but it's not countering the rise of China,'' Thomson said.
This story was found at: http://www.theage.com.au/opinion/political-news/defence-ready-to-muscle-up-2012070621mdj.html
ABN # 65 648 097 123
Background Brief: Australia Debates China-U.S. Relations Carlyle A. Thayer August 9, 2012
[client name deleted] We request your assessment of Australia's foreign policy, particularly relations with the United States and China. What are Australia’s real priorities in foreign affairs? How does Australia view retaining its alliance with the U.S. while developing ties with China? What are Australia’s priorities in Southeast Asia? ANSWER: Australia’s foreign policy elite are now engaged in a debate on Australia's relations with China and the United States that is connected to another debate over cuts to Australia's defence budget. The current Labor Government is taking a beating in public opinion polls and is widely expected to be wiped at the next federal election due by August 2013. The opposition Liberal Party and Labor Party Government support Australia's alliance with the United States and little is expected to change regarding U.S. relations if Tony Abbot, Leader of the Opposition, becomes the next Prime Minister. Commentary on Australia's relations with the U.S. and China is often framed by the following: in the past Australia's major ally (the UK and then the US) was also Australia's largest trading partner. This is no longer the case as China is Australia's largest trading partner. The two economies are widely viewed as complimentary and China's economic growth has had a major positive impact on the Australian economy. But - and here is where the debate is centred - China's economic rise will soon result in its economy becoming larger than the U.S. economy. Economic might is the currency of power, argues Hugh White, a former deputy secretary of defence. By 2030 if not sooner China will be able to challenge the basis of regional order in the Asia-Pacific that has been in place since 1945 - uncontested U.S. primacy. China's military might, some argue, will force the U.S. Navy out of the Western Pacific or precipitate an armed conflict. Under the current government of Prime Minister Julia Gillard, Australia's policy is to support the U.S. alliance fully. This means Australian support for the U.S. strategy of rebalancing its military forces including the rotation of U.S. Marines from facilities near Darwin (their number is expected to reach 2,500 over the next several years) and to support a larger rotational presence of U.S. navy ships and aircraft. U.S. rebalancing is seen as addressing Australian security concerns over the emerging Indo-Pacific maritime region. In 2009 Australia released a Defence White Paper that in so many words viewed China as a looming threat. This White Paper set out an
2 ambitious procurement program including the construction of 12 very large conventional submarines. This has all been delayed with the Government's cuts in defence spending in order to meet its political pledge to balance the budget. Australia faces a gap were there could be no submarines available. The Government has brought forward the next Defence White Paper to the first half of 2013 to take into account changes in the strategic environment. Preliminary work has begun. Some analysts argue there will be no White Paper because the government will lose office within months of issuing the White Paper. The new Government could commission its own White Paper. The public debate has largely focused on budget cuts and the impact on defence capability. The Opposition has not committed itself to restoring the defence budget to pre-cut levels. U.S. officials have voiced concern that Australia will in future no longer be able to shoulder its alliance responsibilities. Australia welcomes the economic opportunities offered by China's rise. There are concerns about the operations of Chinese state-owned enterprises in investing in Australia. And Australia is not supportive of allowing Chinese workers into the country to make up for shortages in the labour force. There has been a drop off in Chinese investment and its shift to Canada. The current government is lambasted for its relative neglect of China in Australia's foreign policy. Critics include Geoff Raby the former Australian Ambassador to China. and Paul Keating, the former Labor Prime Minister. Both argue that Australia's national interests are not necessarily congruent with U.S. national interests. They argue that current Government policy is akin to Prime Minister Harold Holt’s expression "all the way with LBJ" uttered during the Vietnam War; his catchy phrase is now rendered "all the way with the USA." As a self-perceived middle power, Australia endorses multilateralism. Australia was ASEAN's first dialogue partner and strongly supports ASEAN, the ASEAN Regional Forum, APEC and the East Asia Summit. The key to multilateralism is to have good bilateral relations with the major players. Indonesia is now top priority. It is Australia's nearest neighbour, it is growing in strategic weight and influence. Australia has military commitments to Singapore and Malaysia through the Five Power Defence Arrangements and excellent bilateral relations. Australia has established a special niche in Vietnam. Australia supported Vietnam's membership in the WTO and non-permanent membership on the UN Security Council. Vietnam supported Australia's membership in the East Asia Summit. Australia has a growing defence interest in the Philippines, expanding from counter-terrorism to assistance in maritime security.
Suggested citation: Carlyle A. Thayer, “Australia Debates China-U.S. Relations,” Thayer Consultancy Background Brief, August, 2012. Thayer Consultancy Background Briefs are archived and may be accessed at: http://www.scribd.com/carlthayer.