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The rapid rise of a multipolar world is reshaping global economies, stability, prosperity and security – leaving Australia no longer shielded by its geographic isolation. Now, a private equity expert warns that the nation must adopt a viable “self-insurance” policy.
Since the end of the Second World War, the global economic, political and strategic order has been shaped largely by Western-led institutions, economic liberalism and security alliances that underpinned decades of relative stability and prosperity.
The United States, as the dominant power, provided a framework for open markets, international cooperation and military deterrence, while multilateral organisations such as the United Nations, the International Monetary Fund and the World Trade Organisation set the rules of engagement for the global economy and diplomacy.
For Australia, this order brought remarkable economic growth, deep integration into global trade networks and a security umbrella through its close and enduring alliance with the US.
However, this once-predictable system is undergoing a fundamental transformation.
The rise of a multipolar world, driven by the emergence of China as a global power, the resurgence of strategic competition and the fragmentation of international institutions, has profound consequences for national economies, security and social stability.
Traditional alliances are being tested, global supply chains are under strain and economic interdependence – once seen as a force for stability – is increasingly viewed through the lens of strategic risk.
Australia, once able to rely on geographic isolation and strong partnerships, now faces an uncertain geopolitical environment where economic prosperity and security are no longer guaranteed.
Domestically, these shifts are having dramatic impacts on Australian households, businesses and policymakers. Trade tensions, energy security concerns and supply chain disruptions are reshaping economic planning and the global balance of power, while the shifting security landscape is prompting a reassessment of national defence priorities.
With a global order influx, the need for economic resilience, diversified trade partnerships and strategic self-sufficiency has never been more urgent, presenting a significant challenge to Australia’s policymakers and the Australian public as we attempt to collectively thread the needle.
As the global balance of power continues to evolve, Australia must navigate an era of heightened uncertainty. The challenge is clear: to adapt to this changing world, the nation must rethink its economic and security strategies to ensure long-term stability and prosperity in a multipolar age.
Highlighting the need for Australia to embrace a comprehensive policy of “self-insurance” to minimise the detrimental impacts on Australia and our national economic, individual and strategic interests is Christopher Joye, a portfolio manager for Sydney-based Coolabah Capital, writing for The Australian Financial Review in a piece titled It’s a very scary world. Here’s how Australia can make itself safe.
Trade wars, debt crises and the American cost of US security guarantees
Unlike the broader global economy, Australia’s economy has, for the better part of four decades, enjoyed almost unrestricted and unhindered growth, giving rise to a continuing belief that the “Lucky Country” would continue along growing ever wealthier on the back of American-guaranteed security and voracious Asian demand for raw materials, agricultural produce and services.
Where other nations were impacted by the Asian Financial Crisis, the Global Financial Crisis and other more isolated periods of economic turmoil, Australia managed to avoid these periods, until the unescapable COVID-19 pandemic, which served to highlight just how fragile, primitive and vulnerable our national economy and, by extension, way of life right alongside all of our global compatriots.
Yet despite this reality and a brief public and political focus on these challenges, the status quo of economic thinking at home remains firmly fixed on “holes and homes” and services, including higher education, financial services and other niche capabilities, while the public zeitgeist has heavily emphasised on the growth in the stock market.
The COVID-19 pandemic should have served to reinforce the vulnerability of the national economy at both the macro and micro level to global shocks, yet for whatever reason, we have reverted to the “she’ll be right” approach while avoiding the implications of mounting debt crises both at home and abroad.
Joye highlighted this, saying, “Meanwhile, policy uncertainty remains elevated: one minute Canada and Mexico are hit with punitive 25 per cent tariffs; the next, they are afforded forbearance only to be whacked with tariffs again, which are then subject to a raft of possible carve-outs. The underlying truth, however, is that Trump needs the US$1.8 trillion (AU$2.8 trillion) in revenue generated by these tariffs to finance his US$8.1 trillion (AU$12.8 trillion) worth of tax cuts. In the absence of this, he could face a debt crisis in the form of a shockingly higher cost of borrowing.”
It goes without saying that any potential US sovereign debt crisis would undoubtedly have major implications on the Australian economy (after all, when America sneezes, the world catches a cold), with the ongoing trade war between Beijing and Washington already having an impact on Australia’s economic outlook, particularly with major implications on the nation’s resources-dependent economy.
Yet while this is taking place, the US is embarking upon a major transformation of its economy and industrial base, leveraging the trade war to, as Joye stated, “The goal is to actively block competing (and state-subsidised) Chinese products from the huge US market while concurrently motivating the reshoring of his supply chains to fundamentally rebuild the US manufacturing base.”
This “offset” has been met with shock in the global markets and across policymaking circles in capitals around the world, with major global implications and, as is increasingly overlooked, the impacts on the American public. Joye highlighted this, saying, “And make no mistake, this burgeoning trade war is a key part of the battlespace preceding potential outright kinetic conflict. With this in mind, Trump wants to address the global ‘moral hazard’ whereby unsustainably large US defence spending has been the insurer of last resort for liberal-democratic security risks. Almost all nations have relentlessly exploited this US munificence. Europe has been the worst offender. And Trump wants to end the free ride.”
All of this translates to major impacts on Australia’s own national security and what Joye described as our need for a “self-insurance” policy to offset any real or perceived American pullback or economic turmoil that may limit their capacity to continue maintaining global security and stability, particularly in the Indo-Pacific.
Australians are feeling anxious
Amid all of this global economic turmoil, we have, of course, borne witness to the rapid and accelerating deterioration of the post-Second World War strategic order, which was in large part guaranteed and underwritten by the “blood and treasure” of the United States and its people, yet for one reason or another, it has been overlooked.
That is, of course, until Donald Trump entered politics and put the world on notice, which has only served to raise levels of anxiety across the globe, not least of all in Australia, as an already ambivalent and insecure national psyche grappled with the lingering effects of COVID-19, the ongoing return of great power competition and now, the potential abandonment by our “great and powerful friend”.
It is here that Joye strengthened his thesis of a “self-insurance” policy for Australia, encompassing the economic and strategic domains, largely through the development of a comprehensive strategic capability to better prepare the nation to resist attempts at coercion and attempted aggression.
Joye stated, “The solutions are simple. We desperately need credible deterrence. We have to be able to produce our own ballistic missiles with the ability to strike any place on the planet. We need independent nuclear power and the capacity to enrich weapons-grade uranium for strategic optionality.”
Going further, Joye added, “And we need scores of nuclear submarines that can stealthily operate undetected for months at a time with an unalloyed second-strike capability. Taking some of the new B-21 stealth bombers that were previously offered to us by the US would be another obvious solution. Until we have this self-insurance in place, we will never be safe.”
As Australians are increasingly forced to grapple with the reality of a volatile, competitive and potentially hostile world order, where our “great and powerful friend” no longer unilaterally maintains the global balance of power, more pressure and expectation will be placed upon Australia and Australians to underwrite our own economic, political and strategic interests.
The question becomes, do we have the appetite?
Final thoughts
Despite the ambitious rhetoric from both sides of politics, the reality for the average Australian is far from promising. While Australia is blessed with abundant natural resources and immense potential, there is little indication that we are fully harnessing our unique national strengths.
Declining economic opportunities, a rapidly deteriorating global and regional balance of power, and the increasing politicisation of everyday life have deepened a sense of disconnection, apathy and helplessness among many Australians.
Meanwhile, modern Australia has been largely insulated from the harsh realities of conflict, with generations having never experienced food, energy, or medical rationing – let alone understanding the economic and social upheaval such restrictions would bring to our world-leading standard of living.
To safeguard its future, Australia must build the capacity to act as an independent power, developing strategic economic, diplomatic and military capabilities more in line with great power expectations. This shift would not only reinforce Australia’s sovereignty but also position it as a key player in ensuring regional security and prosperity.
Moving beyond the prevailing mindset of “it’s all too difficult” would open unprecedented economic, diplomatic and strategic opportunities for the nation.
As tensions in the Indo-Pacific intensify and China continues to assert its economic, political and military influence, Australia faces a defining choice: remain a secondary power or embrace a larger, more independent role in an era of great power competition. Expanding opportunities for Australians while strengthening economic resilience – and, by extension, reducing vulnerability to economic coercion – must be at the core of government policy.
Only with a strong and dynamic economy can Australia effectively deter threats to its national interests and ensure long-term security and prosperity.
Get involved with the discussion and let us know your thoughts on Australia’s future role and position in the Indo-Pacific region and what you would like to see from Australia’s political leaders in terms of partisan and bipartisan agenda setting in the comments section below, or get in touch at
Stephen Kuper
Steve has an extensive career across government, defence industry and advocacy, having previously worked for cabinet ministers at both Federal and State levels.
