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AUKMIN 2018: The Future of Global Britain?

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RUSI Commentary, with Milia Hau, 14 August, 2018

Britain and Australia face an uncertain strategic landscape. But there is much they can do together, as they deal with the two big powers which appear determined to change the current status quo: China and Russia.

The scene for the 10th annual Australia-UK Ministerial Consultations (AUKMIN) earlier this summer was visually stunning. Australian Foreign Minister Julie Bishop and Defence Minister Marise Payne met with their British counterparts, Jeremy Hunt and Gavin Williamson, at the Royal Botanic Garden in Edinburgh for the AUKMIN meeting. While the visuals were good, it was clear that both liberal democracies came to these negotiations nurturing some very serious misgivings about their strategic environment.

For Australia, it has been an annus horriblis, as it has lurched from one diplomatic spat with Beijing to another, all of them driven by Canberra’s belief that Beijing has been meddling in its domestic affairs and waging an influence campaign among the Chinese diaspora, as well as Australia’s own political elite. For the UK – apart from the running sore of Brexit – the year has been dominated by the Skripal incident in Salisbury, which saw the use of a nerve agent on British soil, resulting in the expulsion of 23 diplomats, and a crackdown on Russian oligarch investments inside the City of London. As these two neo-authoritarian powers become increasingly bold, both London and Canberra have had to deal with a US that is seemingly less reliable, or perhaps more transactional.

It has been an odd time for Western liberal democracies, as they have slowly begun to react to the new geopolitical competition that has intensified in the wake of 2014, when China militarised islands in the South China Sea, and Russia invaded and occupied Ukrainian territory. As a result, the AUKMIN joint ministers’ statement resonated with concerns for the rules-based order with a noticeable emphasis on the Indo-Pacific ‘which is open, prosperous, and inclusive’.

While there is a sensible debate on how far the UK can extend its resources to the region, a Henry Jackson Society report sought to argue earlier this year that the Indo-Pacific presents economic opportunities as well as geopolitical challenges. The region accounts for 60% of the global population and accounts for nearly two-thirds of global economic growth; it is – according to the IMF – the world’s most dynamic region by a wide margin. The decision of the UK and Australia to strengthen their track 1.5 Asia Dialogue last year recognised these dynamics.

How Australia and the UK decide to interact in the Indo-Pacific will become an essential part of the Global Britain strategy. The two states already cooperate in the Five Powers Defence Arrangements and both have growing defence and intelligence ties to Japan. Additionally, they might develop other nodes of regional cooperation, such as a potential Australia–France–UK trilateral, or the already-existing US–Japan–India–Australia Quadrilateral.

While there are serious concerns about the UK’s budgetary capabilities – witness the searing disagreement between Defence Secretary Gavin Williamson and Prime Minister Theresa May about alleged proposed cuts to defence this past June – the Indo-Pacific region does at least present economic returns. The agreement by London and Canberra to pursue an ambitious bilateral free trade agreement once the UK has left the EU and its interest in joining the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership are both opportunities, as is the budding defence industrial relationship. The recent revelation that the two signed a £20-billion deal for nine UK-designed warships might well be an indication of such returns.

As the region is set to lead global economic growth over the next 30 years, it makes sense for the UK to invest in capabilities and diplomatic reach in-region.

While distance still offsets the warmth found in the AUKMIN 2018, the fact is that working together can help both overcome this. The Royal Navy already has one base in Singapore. Perhaps basing rights might be exchanged between both navies; if successful, rights might even be extended reciprocally with the French, which have bases in New Caledonia and French Polynesia. In return, French and Australian marines may dock at British facilities in Singapore.

Another area that might be of mutual interest is that of the South Pacific. While it is a part of the world that few – if any – foreign secretaries think about, we could see this begin to change. Over the past few years, Beijing has been pouring money and developments into these tiny Pacific Island states. While development has traditionally been viewed as benign, the possibility of Chinese submarines docking at a recently built dock in Vanuatu – an island sitting on Australia’s shipping route to its ally, the US – has become a serious concern in Canberra this year. Britain’s decision to massively expand its economic and diplomatic footprint on Vanuatu, the Solomon Islands and Tonga will be warmly welcomed in Australia.

While it is true that the ‘tyranny of distance’ will keep the UK from becoming an Indo-Pacific regional power, Britain can become a significant player. There are multiple nodes of access available, including the Five Powers Defence Arrangements, the Commonwealth and the Five Eyes intelligence-sharing structure. One excellent bit of news from the AUKMIN Ministerial statement is the prospect that London and Canberra will begin coordinatingmuch more closely on foreign direct investment into sensitive digital infrastructure, hopefully avoiding another debacle similar to that which occurred when London allowed the sale of a British data cloud centre to a Chinese consortium in 2017, causing the Australian Department of Defence to remove its data from the company.

Looking into the future, we see that the traditional picture of a US-led Western alliance confronted by Russian and Chinese authoritarianism has returned to mainstream global politics. Only this time, it is not always clear that the US will be as willing to ‘bear any burden’. This requires those great powers and middle powers to band together all the more tightly.

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Explaining the Japan–Australia security relationship: it’s complicated…

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International Affairs Blog, with Tomohiko Satake, 13 July, 2018

During the Cold War, Japan defined its security policy by the Yoshida Doctrine — maintaining a low profile security posture while relying on the United States for protection based on the US–Japan Security Treaty. There was little appetite within Japan’s government or military for military-to-military relationships with other regional states. Yet the past three decades have seen a steady diversification of Japanese security partnerships, including with South Korea, Australia and India as well as with some ASEAN and European countries. Notably, these relationships were not meant to replace the still-dominant security reliance on the US–Japan alliance, but instead were part of a strategy — carried out in tandem with the US — which saw the two states moving away from its strict bilateralism to what Michael J. Green calls ‘federated capabilities’.

The case of Japan and Australia — a ‘quasi-alliance’?

In our recent article for International Affairs, we looked specifically at this rapid diversification of Japanese security partnerships from the perspective of Japan–Australia security cooperation in both the bilateral and multilateral contexts, including the US and China. First of all, it was apparent that while some referred to Japan–Australia relations as ‘quasi-alliances’, they were not, in fact, alliances at all, but merely examples of what Thomas Wilkins called‘alignment’. While these groupings have systematically set about developing ‘alliance-like’ characteristics — such as military interoperability, strategic consultations and institutionalized intelligence-sharing — they have carefully avoided the primary ingredient of alliances: defence guarantees.

We asked why political leaders in Tokyo and Canberra went to the trouble of developing such complex security relationships — one need only look at the general security of information agreement (GSOMIA) and the acquisition and cross-servicing agreement (ACSA), for example — while simultaneously avoiding the primary benefit of a formal alliance commitment to each other? Neo-realist theory would have us believe that as authoritarian China rose in the region and expanded its military hard power capabilities across the maritime space and trade routes of both states, Australia and Japan would either balance Beijing’s ambitions or bandwagon behind them. However, the actual record is more complex and sees political leaders adopting elements of both strategies. At times, Australia and Japan developed very close ties and seemed on the verge of committing to the relationship — as when Prime Minister John Howard offered Prime Minister Shinzo Abe a security treaty in 2007 or when, in 2015, both Prime Minister Tony Abbott and Prime Minister Abe began promoting a submarine deal in strategic terms, labelling theirs a ‘special relationship’. Subsequently, however, caution seemed to reassert itself in both cases and domestic factors inside both countries halted further progress.

Drawing from Tomohiko Satake’s 2011 article on the origins of the trilateral relationship between the US, Japan and Australia and from John Hemmings’ doctoral research, we developed a model for explaining this apparent discrepancy. Faced, for example, with a triple security dilemma, that pits them between (1) a security dilemma with China, (2) an abandonment/entrapment dilemma with each other and (3) a quite separate abandonment/entrapment dilemma with their mutual ally, the United States, Japanese and Australian foreign policy elites simply cannot tell what the optimum policy choice is. What we found, through interviews and by analysing government policy documents, was how bureaucratic coalitions within Canberra or Tokyo would push for given policies, prioritizing one or another of these three drivers. This meant that in some cases the two would align more closely — such as when a pro-alliance group prioritizing the danger of abandonment was in control of the tools of foreign policy — only to pull back after new bureaucratic coalitions, which promoted policies that engage with China and emphasized the dangers of entrapment, took power. This was apparent, for example, after the 2008 election in Australia which saw Kevin Rudd replace John Howard as prime minister, as Australia unilaterally withdrew from the US–India–Japan–Australia Quadrilateral (QUAD) and warned against closer defence engagement with Japan.

What does this mean for the future?

This model explains both the specific pattern of Japan–Australia security ties as well as the historically atypical alignment policies that are rising across the region, in which states begin implementing multipronged strategies to pair balancing with engagement. We see these states building evermore institutionalized security relations, while continuing to closely monitor their relations with Beijing. In academia, this dual-approach has become known as ‘hedging’. As we look to the future, instability and threats to the rules-based order are discussed not only in terms of Chinese assertive behaviour, but also in terms of the Trump administration’s challenge to the liberal international order. Given these circumstances, we must also ask whether our model will see even more non-committal alignments — particularly between medium-sized regional states — or whether China will be able to successfully restrain states from forming balancing alliances. Examples of these alignment patterns are to be found in the Trilateral Strategic Dialogue, created in 2002; in the creation of an Australia–India–Japan trilateral in 2015; and in the revival of the QUAD in 2017.

One interesting implication of our research is that, while abandonment concerns regarding the US engagement in Asia significantly encouraged Tokyo to seek closer ties with India, India itself has been less motivated by abandonment issues. Instead, internal debates in Delhi are more concerned with the risk of becoming entrapped between the United States and a rising China. This, combined with a fear of provoking a security dilemma and India’s longstanding ‘non-alignment’ foreign policy approach, has compelled some factions inside the Indian Ministry of External Affairs to eschew strong commitment to the QUAD. As we can see, this ‘commitment dilemma’ explains why all of these groupings see an ebb and flow of defence institutionalization, despite the fact that all share concerns about China’s intentions and growing military capabilities.

Should the US–China rivalry intensify, we might expect to see bureaucratic coalitions inside all four countries debate the prioritization of alliance commitments versus the prioritization of their relationship with China. Much of this has a mercurial dynamic, meaning that if any player decreases its security commitment to the QUAD, one will see a reaction from the others. If the Trump administration cannot sustain strong and consistent commitment to regional security, one might see a worrying shift in balancing behaviours by other QUAD members, with some reaching out to Beijing. The future of the QUAD therefore not only depends on Chinese assertiveness, but also on the appearance of US resolve to the defence of its smaller allies and partners. No doubt, this debate is occurring now at the domestic level.


Sydney Morning Herald, Latika Bourke, 30 June, 2018

“I think the British government has now woken up to the fact that the Chinese are not on our side on a number of issues,” [Lord] Howarth says.

John Hemmings, a close observer of China at the Westminster think tank the Henry Jackson Society, agrees.

“Despite Brexit, some aspects of UK government have quietly begun to shift into the new paradigm vis a vis a rising geopolitically ambitious China,” he says. “On the home front, they have begun to follow the lead of countries like the US, Germany and Australia in screening Chinese state-led investing into sensitive sectors of the economy.”

 


Chinese strategy in full force in Australia

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Sydney Morning Herald, with Dr Andrew Foxall, 3 June, 2018

Don’t be fooled by last week’s China Zhejiang–Australia Trade and Investment Symposium in Sydney. For all the positive spin put on the event, Canberra is increasingly wary of the influence Beijing reaps from its investments.

But China’s influence doesn’t flow solely from this. It uses a combination of diplomatic and political pressure, manipulation of its diaspora, illicit financing of political parties, and propaganda. According to some, Beijing spends up to US$10 billion ($13 billion) a year on its overseas operations. If this sounds familiar, it is because these are tactics taken straight from the KGB playbook Russia has followed for well over a decade.

Russia’s aim has been to portray itself as a great power on the world stage. Its tactics are often crude and short-term. China’s, by contrast, are slow-burning and systemic. Beijing’s ultimate ambition is to create a Sino-centric regional order, based around tianxia – an imperial concept that puts China at the centre of nations. This strategy is in full force in Australia.

The effects are striking. Former Labor foreign affairs minister and one-time NSW premier Bob Carr is facing demands that he be expelled from the party because of his deep links to China; he directs a think tank founded with a donation from a Chinese billionaire with close Communist Party links and is alleged to have enlisted Labor senator Kristina Keneally to use estimate hearings to ask pro-China questions. Last December, Sam Dastyari resigned from the party over his dealings with a Chinese billionaire.

Other opportunities to exert influence abound. China is Australia’s biggest export market, and Beijing is currently hampering imports of Australian wine and delaying a big meat-export deal. One-third of all foreign students at Australian universities are Chinese, and the families of Chinese students who have criticised their country while studying here have received warnings. China is now using lawfare and illegal occupation of the South China Sea in order to exert pressure on Australia and other countries who depend on its sea lanes.

Speaking last year, Malcolm Turnbull said that “our system as a whole had not grasped the nature and magnitude of the threat”. He was talking about the Chinese threat in Australia, but he could just as easily have been talking about the West as a whole.

In New Zealand, Jian Yang, a Chinese-born sitting MP, was investigated last year by the national intelligence agency in connection with the decade he spent teaching in military and intelligence academies in China – a fact missing from his CV. In Britain, China has developed arrangements with two major British newspapers, The Daily Telegraph and the Daily Mail, and pressured Cambridge University Press into censorship. Elsewhere, it has leant on a number of Western capitals to conform to its view of Taiwan as a province of China.

On the face of it, the threats posed by Beijing should be manageable; each relates to a particular issue that falls under the responsibility of a particular ministry of government. In reality, however, they are difficult to deal with. For the Communist Party, there is no distinction between its business executives, spies, police chiefs, media stars, crime bosses and its politicians. The same people play multiple roles. Everyone, ultimately, is on the same team. The similarities between China and Russia are obvious.

In a report released last week by The Henry Jackson Society, a London think tank, Robert Seely, a British Conservative MP, argues that the Kremlin is waging a “new kind of conflict … in which military and non-military tools are combined in a dynamic, efficient, and integrated way to achieve political aims”. In this conflict, Russia “makes use of at least 50 tools of state power”, ranging from assassinations and blackmail to cyberattacks and disinformation.

Although Seely calls this “contemporary Russian conflict”, he notes that the tools are also being used by other authoritarian states – including China.

Highlighting the threat is a start; the real question is how to deal with it. Unlike elsewhere, the debate about Chinese influence is at full blast in Australia. Duncan Lewis, the head of ASIO, recently told lawmakers in Canberra: “Hostile foreign spies are currently conducting harmful activity … on an unprecedented scale.” In response, Canberra is mulling tough counter-measures, which would require anyone acting on behalf of a foreign state to publically register their activities – akin to the Foreign Agents Registration Act in the US.

But, as Seely’s report makes clear, the questions raised by the behaviour of China and Russia are much broader. They relate to how Western states collectively defend themselves in an age when authoritarian states turn the freedoms of open societies against those same societies.

China is playing a game of divide-and-rule between Western countries as well as inside Australia. Its aim is to weaken individual countries – and, in doing so, make them vulnerable to Beijing’s influence. But as a member of the Five Eyes intelligence-sharing alliance and a NATO partner, Australia should remember that it has powerful friends.


Global Britain in the Indo-Pacific

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Henry Jackson Society,  22 May, 2018

The weight of the global economy is going to Asia, it is going by sea – and the United Kingdom must act now if we are to build a truly Global Britain, according to a new report from The Henry Jackson Society.

Global Britain in the Indo-Pacific notes how the future of both the economic order and the rules-based international system will be decided in the Indo-Pacific. China’s growing naval power, its militarisation of sea lanes and its Belt and Road Initiative indicate not only a power determined to become wealthy, but one determined to set the rules of the coming age. However, many of China’s Asian neighbours seek to defend rules over power.

With Britain looking for new opportunities abroad in the wake of Brexit and the economic and demographic realities pointing east, the report argues that the UK must reinvigorate its partnerships with historic allies in the region, not least India and Japan – while also redeveloping new “special relationships” with Commonwealth countries such as Singapore.

The report highlights that:

  • The global middle class will grow 50% by 2030, with much of that growth taking place in the Indo-Pacific – spawning hundreds of new cities, industries and opportunities.
  • Over 90% of global trade is carried by sea and that maritime trade will only increase as regional powers struggle to bring consumer goods and energy to these new cities.
  • China seeks to exert control over these sea lanes in order to protect its own sea lanes, constrain India’s rise and set the rules for the coming era.
  • The Indo-Pacific is becoming a forum for competing visions of international relations – with many of Britain’s historic allies beginning to align in loose security groupings based on respect for maritime conventions and law.
  • The UK, dependent on the rules-based order and the sea lanes in the region, will ultimately have to adopt the “engage and balance” approach that most Asian powers have adopted towards China.

While endorsing the ‘cautious engagement’ approach of Prime Minister Theresa May to China, the report recommends that Britain should:

  • Seek a number of overlapping security relationships across the Indo-Pacific with large numbers of partners – including the ‘Quad’ of the United States, Japan, India and Australia.
  • Create “special partners” in ASEAN – not least Singapore, where Britain should explore the possibility for regular ‘2+2’ meetings between the two countries’ defence and foreign ministers.
  • Renew her security relationship with Australia – a useful “node of access” for the UK, as Australia is developing closer relations with key allies including the US, Japan and France.

Standing up for the rules-based international order in the face of the challenge from China should also involve:

  • An incremental increase in Britain’s defence spending, from the current 2% of GDP to 3%. This, with a particular focus on the future of naval and air power, would equip the UK with the requisite tools to have a truly ‘global’ influence.
  • Invest in soft power diplomacy to improve ties with Asian countries. These should involve a rise in funding for language programmes at British universities, particularly in Japanese, Chinese and Hindi; and providing help financing infrastructure development across the region, to counter the Belt and Road Initiative.

Read the full report here.


Japan is Back on the World Stage

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The National Interest, Nottingham_iAPS, 4 February, 2018

Just over a month after the foreign and defence ministers of Britain and Japan stood side-by-side in the National Maritime Museum in Greenwich in December 2017, Japan’s foreign minister, Taro Kano, and defence minister, Itsunori Onodera, were standing with their French counterparts in Tokyo. As with the UK-Japan 2+2, the meeting focused on maritime security, with their joint statement calling for a “free and open Indo-Pacific” and reiterating their “common interest” in the rules-based order. The two meetings are in themselves striking by the number of nodes that match: the United States and Japan are strong allies; the United Kingdom and France have strong defence links; France, the United States and the United Kingdom are strong NATO member states; and the United Kingdom and the United States are in the Five Eyes with Australia, a country that now has defence bilateral links with Japan, the United Kingdom and France.

As I’ve written elsewhere, the much-vaunted diminishment of the liberal rules-based order—much of it at the hands of Beijing and Moscow—has become a defining feature of the age. Just a few years ago, pundits sought to frame international relations with the more prosaic-sounding “rise of the rest” and there were suitable and necessary debates on how the rules-based order should evolve to match the new power realities. Those debates were right and proper, and even morally necessary for the system to maintain coherence and legitimacy. After 2014, much of what should have been about rules-based evolution became power-based revolution. In February 2014, Russia “annexed” Crimea, and their “Little Green Men” marched into eastern Ukraine, breaking the Budapest Memorandum of 1994. In early September 2014, Chinese vessels began “reclamation” work on Johnson South Reef, a part of a busy shipping route to which they had no legal right.

While statements have been made to condemn these events, the fact is that the West is dismayed and confused in how to react. The election of a nonconformist president on trade and Brexit have not helped. Nonetheless, it is clear from the France-Japan 2+2 and the UK-Japan 2+2 that liberal democracies are beginning to band together. Not, as some would have it, to “contain” China, but rather to attempt to deter further adventurism and to buttress the rules-based aspect of the order. One can also see this in the scope and content of the U.S.-Japan-Australia trilateral and the U.S.-Japan-Australia-India quadrilateral.

What has perhaps been most remarkable about these groupings is the pivotal role played by Japan in them. After all, as recently as 1991, Japan had no close security partners besides the United States, and remained entrenched and immobilized by the pacifist Constitution and foreign policy that it had inherited from the postwar settlement. China and the Koreas notwithstanding, the revival of Japanese hard power and diplomacy has been welcomed and encouraged by the United States, Australia, and India as a return to normalcy—an unsurprising reintroduction of Japan to the family of nations. This has also characterized the views of many of those Japanese leaders inside the LDP, Japan’s ruling party, including Junichiro Koizumi, Taro Aso and Shinzo Abe. While Koizumi is the first post-Yoshida Prime Minister of Japan, Abe has been in many ways, the most revolutionary and dynamic in terms of Japan’s security policy regionally but also in Europe.

Under Abe’s watch, Japan has not only passed significant legislation developing a national security apparatus, he has also passed legislation allowing for collective security with regional partners and introduced intelligence reforms that inhibit espionage inside the country. It is said that Japan is on the cusp of far-ranging intelligence reforms as well, particularly centred around the creation of a civilian-led intelligence agency, overseen by some sort of parliamentary process. Much of this has been done in consultation with those countries that Japan considers partners if not allies, including the United Kingdom, Australia, and of course, the United States.

Japan’s push into Europe is now said to be beginning in earnest and one can see this in a number of ways. First of all, Japan and the EU are going to sign a free trade agreement—it is said, by the summer. This will immediately push Japan past China, South Korea, and even the United States, in the EU’s estimation as an economic partner of significance. China is currently the second largest partner, while the United States is the first largest partner, with Japan coming in at a modest seventh place. Layered atop this new economic importance to Europe, Japan’s ties with France and United Kingdom are proceeding steadily.

The France-Japan 2+2 began in 2014, the same year that China and Russia began to use military force to challenge the rules based order. The following year, the UK-Japan 2+2 began meeting. Both bilaterals bear more than a striking resemblance to the Japan-Australia bilateral in that they remain noncommittal, but nevertheless seek to institutionalize cooperation in the types of sectors traditionally reserved for close allies. Thus, both London and Paris have agreed to Arms Transfer Agreements with Tokyo, allowing for greater defence collaboration at the defence industrial level. With France, the Japanese are exploring a possible undersea mine-clearing UAV, while with the United Kingdom, the Japanese have looked into putting Mitsubishi Electric sensors into the British Meteor missile. Since both are top-tier partners on the American F-35 programme, they are now carrying out a study to see if the resulting missile will be interoperable with the fighter.

There have also been a number of other small steps. The United Kingdom, for example, signed a logistics agreement in 2015 known as an Acquisition and Cross-Servicing Agreement (ACSA). The ACSA enables British forces and their Japanese counterparts to exchange food, fuel, ammunition and carry out other logistical practices together. The defining purpose is interoperability. While France and Japan have not yet signed an ACSA, their joint statement implied that progress was being made on the logistical agreement.

So what are the drivers for Japan in all this? Well, as has been mentioned, insecurity has played the primary role. Tokyo sees these security partnerships and defence industrial collaboration as a way of developing quasi-alliance ties with a number of Western states as a means of balancing against what may become a threatening Chinese rise. But not all is grand strategy. Japan faces—like other advanced economies—defence inflation, that’s to say the growing research and development costs of defence industrial capacity. One need only look at the computing power of the most recent advanced fighters, compared to their ancestors sixty years ago. In moving towards mid-sized defence industrial powers, like France and the United Kingdom, Japan is clearly looking to pick up tips on how to make a leaner R&D process, how to create open tenders and how to structure the acquisition process internally. The question will be of course, whether these security partnerships morph into full-blown alliances. At their present state, it is not clear that they are sufficient to buttress the much-needed rules-based order.


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The Interpreter. 22 January, 2018 (with James Rogers)

Recently the Lowy Institute’s Aaron Connelly argued that there is not much Britain can do in Asia because British power is diminishing. This is unsurprising.

One of the biggest challenges in international relations is ascertaining a given state’s place in the international system. People often get it wrong, they sometimes confuse power with capability and, like author Paul Kennedy, miss important trends, such as the information revolution.

While it’s true the UK will incur costs from leaving the EU, the numbers reveal a more positive story than Connelly suggests. Furthermore, the UK’s strong set of institutional, governance, and economic capabilities – comprising actual as well as latent power – will mean greater UK engagement in the world. Indeed, the UK already sees itself moving toward the constellation of states, including Australia, concerned with maintaining the rules-based order from would-be revisionists.

As a 2017 Henry Jackson Society report based on 59 indicators showed, the UK’s total geopolitical capability remains very high despite its decision to leave the EU. Indeed, many of the dire predictions made prior to the referendum have simply not occurred. Nor are there indicators that they might yet happen.

The UK economy remains the fifth or sixth largest in the world (depending on the indicator), and is among the wealthiest and most technologically advanced. Growth for 2016, recently revised up for a second time, was 1.9%, making Britain the joint-fastest growing economy in the G7. Preliminary statistics show that UK output last year grew by an impressive 1.7%.

As for the predicted exodus of financial institutions from London, this has been far less severe than anticipated, mainly because few understand how difficult transitioning to a European capital would be. London is one of the world’s two largest financial centres, and it is highly unlikely that any single European city could replace the financial ecosystem of commercial law firms, international banks, brokerage firms, and financial services that have developed organically in the City of London and Canary Wharf in recent decades. In terms of financial centrality, London has 27% more capacity than Paris, and nearly 99% more capacity than Frankfurt.

The UK retains a number of structural features that bolster its robust economy. Britain’s infrastructure is up to date and successfully connects a densely populated and urbanised island.

While British research and development spending remains lamentably low, the government has pledged to increase it to internationally competitive levels. In any case, this has not hindered Britain’s universities from becoming among the world’s strongest, ranking third in terms of scientific and medical Nobel Prizes awarded to alumni since 2007.

In terms of ‘connectivity’, the UK ranks fifth in the world (and first in Europe) and has several hubs for tech start-ups, including Cambridge and Shoreditch in London.

In military terms, Britain has just launched a 70,000-tonne aircraft carrier which significantly outweighs the combined tonnage of all surface combatants in the German Navy, while the Royal Fleet Auxiliary (Britain’s naval replenishment service) has more than five times the displacement of all the French Navy’s comparable large auxiliary vessels.

The British Isles may seem a long way away from Australia and South East Asia, but these critical capabilities, combined with Britain’s ‘strategic array’ of naval and air stations linking Portsmouth and Plymouth to the British naval facility in Singapore via Gibraltar and bases in Cyprus, Bahrain, Oman and Diego Garcia, affords Britain the ability to overcome the tyranny of distance.

In 2011, the Royal Navy responded to Typhoon Haiyan with greater speed than most regional powers; today, the UK has a global naval reach exceeded only by the US, and perhaps in the near future by China. And with the commissioning of the Royal Navy’s second supercarrier, HMS Prince of Wales, in a couple of years, as well as a flotilla of larger, more capable replenishment vessels, Britain’s ability to project itself into the Indo-Pacific will almost certainly increase.

The recent trip of British Eurofighter Typhoons to the region shows that the Royal Air Force will not lag behind the Royal Navy in this respect.

Britain also holds latent power, much of it in its military-industrial base, which is one of the world’s largest. British shipbuilding, aerospace, and defence industries bring in revenues of US$40 billion, which is nearly double that of France, and exceeds Russia’s US$31 billion.

What is more, this base is supported by one of the world’s largest military expenditures, at approximately US$56 billion. However, this amounts to only 2.14% of British national output, one of the lowest levels in British history. If this was increased to a still-modest 3% of GDP, considerably less than during the 1980s or early 1990s, the UK would be spending more than US$72 billion per year – more than any power active in the Indo-Pacific, bar China and the US.

To give Connelly credit, he does note Britain’s role in the UN Security Council, as well as its pivotal leadership role in NATO. But he fails to mention that the UK is the only European power other than France to have security arrangements in place in the Indo-Pacific, in the form of the Five Power Defence Arrangements. True, this network is latent rather than harnessed power, but it could be readily enhanced as a locus of regional security cooperation, perhaps involving Japan, as suggested by Shinzo Abe a few years ago.

Connelly also ignores the UK’s powerful position within the Five Eyes network, which is odd given Australia’s own reliance on these jointly pooled intelligence capabilities. In terms of cyber capabilities, of the five allied countries, only Britain and the US have developed significant offensive as well as defensive capabilities sufficient to dissuade and deter attacks.

Furthermore, Connelly overlooks the growing strategic focus of the UK Government on parts of the Indo-Pacific in recent years, even as it has beaten off an attempt to break up the UK and has implemented the British people’s decision to leave the EU. Since 2013 Britain has pursued deeper security and defence relations through a treaty with Australia, and a fast-growing 2+2 defence and security dialogue with Japan, to such an extent that in December, London and Tokyo declared they were each other’s ‘most important partner’ in Asia and Europe, respectively.

Britain has also fostered slightly deeper ties to Malaysia, Indonesia, Singapore, South Korea and India in key areas, such as counterterrorism and cybersecurity. At the western edge of the Indo-Pacific, the UK has boosted its presence in the Gulf and the Arabian Sea with enhanced or new naval facilities in Bahrain and Oman, backed up by a tour of the region by the British Prime Minister, Foreign Secretary, and Secretary of State for Defence in December 2016.

The UK’s decline is no more pronounced than that of any Western nation, including the US. Although Connelly is right to point out that efforts to deal with the consequences of withdrawal will take up much bandwidth in the short term, the UK is almost certain to remain one of the half-dozen most capable nations in the world, and one that remains invested in the rules-based and maritime order.

It may well be that Connelly is concerned with political will; but as he should know, this is as changeable as a referendum or presidential election.

The fact is, Britain has the ability if it chooses.

Although it is unlikely Britain will place the Indo-Pacific at the centre of its national strategy, it will look to buttress some of the groups now being formed in the region, such as the US-Japan-India-Australia Quadrilateral, not least to help shore up the rules-based order. It is well within its capabilities to seek a constabulary role over its trade routes, even beyond Singapore.

As the UK’s focus moves away from the European continent and back to its traditional maritime space, its hard power will follow. In the face of rising maritime trade and maritime security challenges, the UK is destined to look at trade, economy and security in a far more unified way than in recent years. This isn’t Britain pining for an imagined imperial past; this is a Britain prepared for a rules-based maritime future.

So, while we don’t wish to sound triumphalist, we do wish to assure Aaron Connelly that Britain has the hard power capabilities to drive ever-closer engagement with Australia and other regional powers, and we look forward to working together on the high seas.

Jeremy S. Maxie

Energy & Political Risk Consultant

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