Published daily by the Lowy Institute

What “Utopia” got wrong about China and defence policy

If Australia didn’t have a Defence Force, would China have turned to force rather than economic coercion?

The clip from Australian TV satire “Utopia” is undeniably funny, but as a critique of Australian defence policy, it’s a bit superficial
The clip from Australian TV satire “Utopia” is undeniably funny, but as a critique of Australian defence policy, it’s a bit superficial

You’ve probably seen it on Twitter or Instagram. Maybe a friend emailed it to you, or maybe you were the sender. It gets waved around social media like a talisman that can settle any argument about AUKUS, Australian defence policy, and China’s threat to Australia.

In case you don’t know what I’m talking about, here’s the clip from a 2017 episode of the Australian TV satire Utopia, which has enjoyed Michael-Caine-off levels of ubiquity since the AUKUS launch in San Diego in March, at least among Australians who follow politics.

The clip is undeniably funny, but as a critique of Australian defence policy, it’s a bit superficial. There is nothing at all inconsistent about Australia defending itself against a country it trades with. In fact, it’s common for countries that trade together to also fight one another. Europe was highly economically integrated before the First World War, yet that didn’t prevent the war. Of course, no single example settles the question, and the debate over the link between trade and war is centuries old (see “Manchester liberalism”).

Let’s reduce this issue to its essentials. Trade is what happens when one country wants something valuable from another. That “something” could be iron ore, or wine, or live cattle. But it could equally be that one government (Country A) wants another government (Country B) to do something. Maybe A wants to stop B from allying with a third party, or it wants B not to produce nuclear weapons. Whatever the motivation, when Country A wants something that Country B is not prepared to give away for free, then Country A has two options: it can negotiate with B, or it can coerce B, including with threats of force and even the use of force, if threats alone don’t work.

Even against defenceless countries, making violent threats is costly and risky.

Faced with this choice, Country A must decide which option is likely to get them what they want at the lowest cost. And one thing they need to weigh up is whether B can withstand and even retaliate to coercion. That’s what B’s armed forces are for. They exist to raise the potential cost of making threats, and thus to take that option off the table for A.

In other words, armed forces are necessary to incentivise foreign governments away from coercion and towards negotiation.

To illustrate the point, think about what Australia’s trade with China might look like if Australia abolished its Defence Force. In fact, we don’t need to imagine this because, in a way, New Zealand has conducted this very experiment. The NZDF is a pretty weak fighting force these days. So, is New Zealand now completely under China’s thumb, as the theory would suggest? Not really. China still trades with New Zealand at market rates rather than simply intimidating Wellington into giving away its exports for free.

That’s because, even against defenceless countries, making violent threats is costly and risky. First, China has its reputation to consider. What would its other trading partners think if Beijing went around strong-arming little countries such as New Zealand? China would suddenly become a less attractive partner, even an international pariah. Geography also plays a role. New Zealand is a long way away, which makes it hard for China to make credible threats – what damage could it even do to New Zealand? Finally, there is alliance politics to consider: if China threatens New Zealand, it will have to deal with the United States and Australia as well.

None of those factors eliminate the risk that China will threaten New Zealand, but they do severely reduce it. New Zealand has made the reasonable decision that the risk is small enough to take.

Australia, just as reasonably, has made a different decision. Australia runs higher risks, firstly because we don’t have a big ally living right next to us, as New Zealand does. And Australia has a bigger economy with more valuable exports, so is more likely to be subject to Chinese threats. In fact, Beijing has imposed trade measures against Australia over the last two years to protest Australian policies and force us to change them. It is telling that China has used economics to coerce Australia rather than threats of force. This might be counted as evidence that the ADF is doing its job.

A final point: although military forces are a critical pre-condition for trade, this is not the same thing as saying that Australia needs the ADF to protect its trade routes. The debate over whether one nation can bend another to its will through blockades is another lively one, which Defence Minister Richard Marles entered on the ABC’s Insiders program a few weeks ago.

At the 2:40 minute mark, Marles effectively uses the same argument as the officials in the Utopia clip. The job of the submarines, he says, is to protect Australia’s trade routes:

… in the 1990s we had eight oil refineries which were producing most of our liquid fuels onshore. Today we have two, and most of our liquid fuels we import, indeed most of what we use we import from one country and that’s Singapore, so one trading route right there … and right there displays a vulnerability we need to protect.

The distance between Singapore and Sydney is more than 6000 kilometres in a straight line and even further by sea. How are eight nuclear-powered submarines, only two or three of which will be available for operations at any one time, supposed to defend every ship traversing that vast stretch of ocean? Even the US Navy, with all its resources, would struggle to do it.

But more to the point, for a fraction of the $268–368 billion Australia is set to spend on those eight submarines over the next 30 years, we could just build more oil refineries. Or better yet, why not massively accelerate the electrification of the transport system so that Australia never needs another oil refinery again?

Now that’s grist for a Utopia episode.

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