The trilateral security partnership AUKUS continues to dominate Australian national security debates, and for good reason given the $368 billion price tag. Yet a more fundamental question remains largely neglected. Is direct military spending really the medium-to-long-term determinant of regional security in Asia, or even security in general? On face value, the answer seems obvious. When statically comparing like-for-like countries, of course military spending matters. That being said, the quality of this spending matters even more, which should give Australia pause given its persistent defence procurement issues.
Yet China’s almost inconceivably rapid economic rise tells a different story. Reported Chinese defence spending as a proportion of GDP has actually decreased over time, despite massive increases in defence capability. In this context, China’s 2001 accession to the World Trade Organization (WTO) is by far the most important recent development shaping the balance of power in Asia, helping to supercharge Chinese economic growth. As Paul Kennedy emphasises in his canonical The Rise and Fall of the Great Powers, economic performance is a vital determinant of long-run geopolitical might in alleviating the classical trade-off between guns and butter.
Australia is particularly well placed to shape the medium- and long-term economic determinants of the regional distribution of power.
Absent a sudden ten-fold increase in its population, it will not be Australia but rather its Asian neighbours that potentially replicate China’s meteoric rise. By some estimates, India and Indonesia are projected to become the second and fourth largest economies in the world respectively by 2050.
Australia is contrastingly far too small to shape the regional balance of power via military means, and its defence investments will remain a rounding error in comparison to the sheer size of the Chinese and US military-industrial complexes. This is the inconvenient truth ignored by many pro-AUKUS commentators. In fact, to my knowledge, no AUKUS supporter has claimed that the pact will decisively shape Australia’s regional security. At best, they see AUKUS as one piece of a broader coalitional puzzle. This is perhaps why US Undersecretary for Defence Policy Elbridge Colby, the most eloquent advocate for an Indo-Pacific “strategy of denial”, has questioned AUKUS’ benefits for the United States, especially absent ironclad Australian commitments to joining a future regional conflict. For the Trump administration, reinvigorating the US’ submarine building capacity is simply a far more pressing and consequential imperative.
That Australia cannot guarantee regional security via military means should not provoke a feeling of helplessness. It can evidently defend its territory and people for a relatively low cost. Australia is also particularly well placed to shape the medium- and long-term economic determinants of the regional distribution of power. Australia has a highly capable albeit underfunded diplomatic service, outsized expertise in economic and trade issues, and a long history of multilateral economic dealmaking. While the Australian government has importantly embraced a “whole-of-nation” approach to national security, the international dimension of this strategy remains peripheral, particularly with respect to global economic governance.
Moreover, the global economic order is in a profound state of flux, thanks to Trump’s “Liberation Day” tariffs, exploding sovereign debt levels, and severe aid cuts. This state of disorder presents a fundamental challenge to the developmental prospects of numerous Asian states, most prominently India, Indonesia, and Vietnam. It is here, rather than on defence alone, that Australia should concentrate its national security strategising.
In this context, Australia should strive to alleviate global constraints on economic development, seeking to realise Foreign Minister Penny Wong’s appealing vision for a region in which “no country dominates, and no country is dominated”. Such a vision requires the emergence of multiple economic powers in Asia, especially amidst ambiguity surrounding the US’ long-term commitment to the region.
Given its size, Australia is always going to be most influential when acting diplomatically rather than militarily.
Australia should aim to work with Indonesia, India, Vietnam, and other Global South states – especially in the Pacific – to shape global institutions and rules surrounding aid, climate finance, debt, and trade such that they are maximally conducive to rapid economic development, even at the expense of its established Western allies.
Specifically, Australia should look to negotiate new trade rules that restrict great power tariff competition while constitutionalising increased development policy space for green industrialisation. This would acknowledge that WTO rules, while largely benefiting Australia, have had uneven effects on the developmental prospects of many Asian states. Australia should also actively lobby for widespread sovereign debt cancellation, which would significantly increase the fiscal space of developing countries across Asia. Finally, Australia should become a global climate finance leader by promoting measures such as global solidarity levies on aviation and maritime emissions, which could form the cornerstone of its bid to co-host COP31.
Such an approach would further help Australia to build ever closer diplomatic relationships in the region – an essential precondition for increasing its security. Critically, it reflects a humility about Australia’s capacity to shape regional and global affairs. Given its size, Australia is always going to be most influential when acting diplomatically rather than militarily.
From this vantage point, AUKUS not only risks undermining Australia’s direct defence and its diplomacy and development agendas. It also ignores the realities of Australian power and statecraft. As the Trump administration conducts its review of AUKUS, Australia should start questioning the near-totalising place of defence spending in the national security debate.
