Oz Disarms in a Gathering Storm

By Philip Bowring

Sydney -- Defense Secretary Leon Panetta announced last month that the U.S. is refocusing its naval strength on the Asia-Pacific and plans to base the majority of its warships there by 2020. In contrast to American concern about the region, Australia seems positively relaxed.

Three weeks before that announcement, Canberra unveiled the smallest defense budget as a percentage of national income since 1938. Is this the result of different assessments, or do Australians want a free ride under the American security umbrella?

Prime Minister Julia Gillard's defense cuts for the fiscal year that began Sunday appear to have been motivated by the desire to show a balanced budget without increasing taxes. The axe is falling mainly on investment in new ships and aircraft rather than personnel and operations. In real terms, according to the Australian Strategic Policy Institute , defense spending will fall by 10%, and a restoration of budgets to the previous percentage of national income is not envisaged.

The government has ordered up a new defense white paper to be published in 2013 that will likely recommend this lower level of spending. It assumes savings from ending Australian commitments in Afghanistan and East Timor, and takes into account the impact of the global financial crisis on the economy.

But cutting spending makes no sense when threats in the region are growing. The rise of Chinese naval power is the biggest worry, but various other Pacific countries and India are increasing their naval budgets as well. India, Vietnam and Singapore, now to host four U.S. littoral combat ships, are strengthening their defense links with America.

This emerging arms race means Canberra can't rely on the U.S. "pivot" to secure the region. Australia hung back at the recent Shangri-la Dialogue of defense chiefs in Singapore, despite the recent stationing of a token force of U.S. marines in its Northern Territory. Australians should keep in mind that given the overall reduction in U.S. defense spending, increased emphasis on the Pacific and sea power may not amount to much in absolute terms.

The U.S. plan also counts on allies in the region, including Australia, stepping up. But as a percentage of national income, Australia spends little more than a third what the U.S. does on defense, less than half what Singapore does, 60% of what Vietnam does, and about as much as Thailand or Malaysia.

Funding cutbacks also go against Australia's close diplomatic and rhetorical support for the U.S., and past willingness to show solidarity by sending troops to Iraq and Afghanistan. This reflects pro-American national sentiment and a sense of reliance on the U.S. dating back to 1941.

Then there's the need for Australia to have a robust defense because of the increased importance the country has assumed as a major global supplier of iron ore, coal, liquefied natural gas and other minerals. Australia does not want to offend China, now its largest export market. But as a supplier to the world, its underlying interest is not to please one client but to keep its sea lanes, and the South China Sea, open to all. That would seem to require greater long-term commitment on Canberra's part, but prospects look poor.

In the face of strong reasons to maintain a solid defense, both political and economic, critics sometimes turn to a geographic argument for cutting funding. Many Australians now prefer to "see no evil," assuming potential security problems are either too small or too big to worry about. Polls show Australians think that security threats in the region are shrinking.

There is an element of wishful thinking at work here. Australians don't want to get caught up in the internal turmoil of their South Pacific neighbors. And with a small population and two-ocean coastline to patrol, they know that their country can never be more than a minor player in the wider world.

But since Australia depends on collective defense, it can't keep shirking the hard choices. When replacing the current submarine fleet, Canberra has to decide whether it needs a fleet that can focus on coastal and Southeast Asian waters or one capable of operations in northeast Asia. It has to decide whether amphibious capability to project land power overseas is a priority, or if upgrading to expensive F-35 fighters would help it coordinate in the skies better with the U.S. and Japan. The dilemmas are many.

If threats can present themselves in many different ways, defense spending can't just focus on a narrow range of capabilities. On the other hand, preparing for several scenarios would spread resources too thin. While this presents challenges, cutting the budget in no way resolves them. Only a well-equipped military that actively coordinates with the U.S. and other allies can play a regional role.

Reviving defense spending is a tough political sell in Australia right now, especially given the health and welfare demands of an aging population. It may need a strategic shock (hopefully not of 1939 dimensions) to shake Australia out of its complacency about security in the Western Pacific.

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