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Deterrence is about being able to win, so what does economic deterrence look like?

Deterrence is about being able to win, so what does economic deterrence look like?

The nation’s economy has been battered by the impact of bushfires, the continuing impact of COVID-19 and now increasing economic coercion as great power competition rises. The resilience, competitiveness and diversity of the national economy is emerging as a critical component of a holistic deterrence capacity. 

The nation’s economy has been battered by the impact of bushfires, the continuing impact of COVID-19 and now increasing economic coercion as great power competition rises. The resilience, competitiveness and diversity of the national economy is emerging as a critical component of a holistic deterrence capacity. 

At the end of the Cold War, Australia, like much of the victorious US-led alliance, believed that the “end of history” was upon us, that the era of great power competition had forever been relegated to the pages of antiquity – we now know that to be wishful thinking. 

Far from this promise, across the globe the US-led liberal-democratic and capitalist economic, political and strategic order is under siege, driven by mounting waves of civil unrest, the impact of economic stagnation across the West, concerns about climate change and the increasing geostrategic competition between the world’s great powers. 


Adding further fuel to the fire is the global and more localised impacts of COVID-19, which range from recognising the impact of vulnerable, global supply chains upon national security as many leading nations, long advocates of “closer collaboration and economic integration”, grasp at the life boats of nation-state to secure their national interests. 

Despite its relative isolation, Australia’s position as a global trading nation, entrenched in the maintenance and expansion of the post-Second World War order, has left the nation at a unique and troubling crossroads, particularly as it’s two largest and most influential “great and powerful” friends: the US and the UK appear to be floundering against the tide of history. 

Furthermore, the fragility of these two nations has prompted many global dictators to take advantage of the absence – as the old saying states, “When the cat is away, the mice will play”, leaving Australia and many other allies, including Taiwan, Japan and South Korea, exposed to the whims of nations dedicated to the end of post-war order. 

Nowhere is this more evident than across the Indo-Pacific as an emboldened Beijing continues to punish Australia for pursuing a global inquiry into the origins and China’s handling of COVID-19, while also leveraging the comparatively diminished presence of the US military in the region to project power and intimidate both Japan and, critically, Taiwan. 

However, as debate continues to brew closer to home, the often overlapping areas of “resilience” and “security” are causing a stir among Australia’s public policymakers and political decision makers. 

While the Commonwealth has moved to reassure both the Australian public and its alliances around the world with the announcement of the $270 billion 2020 Defence Strategic Update and supporting 2020 Defence Force Structure Plan designed to maximise the traditional “defence” understanding of deterrence, the precarious position of the nation’s economy leaves a critical part of the nation’s deterrence capabilities unaddressed. 

Economic resilience as strategic deterrence 

The last time Australia’s public policy community was called upon to respond to such a predicament was the combined challenges of the Great Depression and the Second World War, both of which had a dramatic impact on the national psyche and the post-war period of rebuilding and expansion. 

This model is perfectly summarised by Ricky French in a piece for the Weekend Australian, titled “After catastrophe, opportunity knocks”, stating: “We’ve seen it time and time again.

“After bust comes boom. Major disruptions and economic calamities have historically opened the doors for positive change and left lasting imprints on our built landscapes.

“Against the backdrop of COVID-19, we’re seeing it again, with the rediscovery of the local neighbourhood counterpointing the tragedies of unemployment and its associated issues. We’ve started once again looking for a legacy, wondering how our country might visibly change for the better, seeking out that light in the gloom.”

Indeed, in looking for the “legacy” as French states, the Australian public are seeking to reignite not only Australia’s sense of identity, but equally reignite Australia’s potential and indeed the promise our still young nation has to offer both to the citizens and the world, particularly as we will be increasingly required to provide for our own prosperity, stability and security in an era of great power competition. 

Recognising this, French poses an important question for consideration: “So, where to now? Our borders are shut, there will be no influx of migration to fulfil grand infrastructure schemes, or create demand for them.

“As we step into our first recession in almost 30 years, what lessons from the past can we learn? Will any shining landmarks stand out when we look back on this time 30 years from now?”

Well, that is an important question to ask, and it is critical to identify that Australia’s state, territory and Commonwealth government have made small strides to shore up industries across the economy. The approach is unfortunately fragmented and fails to be guided by a broader strategy and indeed vision for the nation at a time when both the public and the world are calling for Australia’s level-headed approach to life. 

However, the simple reality is we can’t offer the world our best if we’re not at our best.  

Addressing this requires a considered, targeted and integrated approach to develop not only economic resilience, but equally, economic competitiveness, industry diversity and, above all, trade diversity in an increasingly competitive and contested global environment. 

Use the Defence Strategic Update model as a foundation to build economic deterrence

The government’s release of the 2020 Defence Strategic Update and Force Structure Plan, while revealing the still myopic view of public policymaking within the halls of power, provides an opportunity to take a more integrated approach to public policymaking, while also serving to address the growing economic, political and strategic anxiety and concerns simmering within the Australian public. 

While it is often said that much of Australia’s public policymaking decisions are based on the comparatively short election cycles across the various jurisdictions and this is a challenge faced across the democratic world – however, the grand irony is that if governments and oppositions planned for the long term, they’d be more likely to be returned. 

In light of this, it is time for Australia to plan for the next 15 to 20 years, not the next term of state, territory or federal government, providing policy consistency and above all, long-term stability and vision for the public and surety in a period of global and regional turmoil. 

This approach requires more than vanity programs, which can be best left to local government or private developers, rather, it requires a strategic approach to a number of highly visible, big impact public policy areas, including:

  • Infrastructure development: Addressing the critical links between hubs of economic prosperity, including regional hubs and metropolitan centres – including improved, faster and more reliable road, rail and air transport links. 
  • Water security: Australia is a continent of extremes, “droughts and flooding rains”, yet we do little to adequately channel and store the vast quantities of water that falls  now is the opportunity to promote economic stimulus through infrastructure investment while supporting Australia’s agricultural industry and drought-proofing the continent.   
  • Energy and resource security: Addressing the nation’s lack of strategic resource and energy supplies has come to the fore during COVID-19, preparing the nation for such challenges, whether natural or manmade, should be of paramount priority  this requires less ideology and more pragmatism. 
  • Strategic industry development: COVID has stirred many within the Australian public to question why Australia isn’t manufacturing more of the critical  it is clear that Australia requires a concerted policy initiative in the form of a Strategic Industries Act to develop a robust, globally competitive industry 4.0-oriented manufacturing base. 

Each of these contribute to the nation’s sovereignty and security at a time when many of the principles that Australia’s post-Second World War public and strategic policy is based upon are coming under threat – serving to make Australia a more reliable economic, political and strategic partner amid a period of great power competition. 

Furthermore, it serves to make Australia more resilient to manmade and natural shocks, resistant to coercion, economically competitive and robust at a time when the Australian public are calling for leadership, forward planning and vision. 

Doing so fits with the sentiment established by Prime Minister Morrison when he announced the 2020 Defence Strategic Update and supporting 2020 Defence Force Structure Plan, where he stated: “As one of the world’s oldest liberal democracies, we know who we are, we know what we believe, we know what we’re about, we know what we stand for, and we know what we’ll defend.

“We’re about having the freedom to live our lives as we choose in an open and democratic liberal society without coercion, without fear. We’re about the rule of law.

“We’re about being good neighbours, pulling our weight, lending a hand and not leaving the heavy lifting and hard tasks to others. We don’t seek to entangle or intimidate or silence our neighbours.

“We respect their sovereignty. We champion it. And we expect others to respect ours. Sovereignty means self-respect, freedom to be who we are, ourselves, independence, free-thinking. We will never surrender this. Never. Ever.”

This point is further enhanced by a poignant and timely question raised by senator for NSW, retired Major General and long-time advocate for a holistic National Sovereignty Strategy, Jim Molan AO DSC, who recently told Sky News: “The point that I make is that if we need to put $270 billion over the next 10 years into defence, what other parts of our society, of our nation do we need to address to match whatever this $270 billion is going to buy us in the end?

“The basis for our national security is the economy. The problem I have is how does a government know risks it is taking by not funding certain aspects of national security, if it doesn’t know what we absolutely need?”

Your thoughts

Australia is defined by its economic and strategic relationships with the Indo-Pacific and the access to the growing economies and to strategic sea lines of communication supporting over 90 per cent of global trade, a result of the cost-effective and reliable nature of sea transport.

Indo-Pacific Asia is at the epicentre of the 21st century’s era of great power competition and global maritime trade, with about US$5 trillion worth of trade flowing through the South China Sea and the strategic waterways and chokepoints of south-east Asia annually.

For Australia, a nation defined by this relationship with traditionally larger yet economically weaker regional neighbours, the growing economic prosperity of the region and corresponding arms build-up, combined with ancient and more recent enmities, competing geopolitical, economic and strategic interests, places the nation at the centre of the 21st century’s “great game”.

Enhancing Australias capacity to act as an independent power, incorporating great power-style strategic economic, diplomatic and military capability serves not only as a powerful symbol of Australias sovereignty and evolving responsibilities in supporting and enhancing the security and prosperity of Indo-Pacific Asia. 

Australia is consistently told that as a nation we are torn between our economic relationship with China and the longstanding strategic partnership with the US, placing the country at the epicentre of a great power rivalry – but what if it didn’t have to be that way?

Get involved with the discussion and let us know your thoughts on Australia’s future role and position in the Indo-Pacific and what you would like to see from Australia’s political leaders in terms of shaking up the nation’s approach to our regional partners.

We would also like to hear your thoughts on the avenues Australia should pursue to support long-term economic growth and development in support of national security in the comments section below, or get in touch with This email address is being protected from spambots. You need JavaScript enabled to view it.or at This email address is being protected from spambots. You need JavaScript enabled to view it.

Stephen Kuper

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.

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