In-Depth

by Malcolm Riddell

AUKUS: A New World Order?

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Malcolm Riddell
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Malcolm Riddell
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Malcolm Riddell

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Founder of CHINADebate
Interview

Malcolm Riddell

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Founder of CHINADebate

Malcolm Riddell

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Founder of CHINADebate
AUKUS: A New World Order?
AUKUS: A New World Order?

In case you passed over the news of AUKUS, the new strategic alliance among the U.S, the U.K., and Australia, here a few headlines to encourage a deeper look:

Is this the start of a new world order?

  • Or is it perhaps a capstone on the glacial shift of recalcitrant nations to stand up to China?

To become a new world order, more of those countries, especially in the EU – and the EU itself – will have to get on board.

  • The current indications are that they are, however slowly.

BTW the leaders of the QUAD – the U.S., Australia, Japan, & India – will meet this week at the White House.

  • More on the QUAD later.

1 | Biden’s China Policy Muddled No More?

‘Biden's muddled China policy’ is the headline of Jonathan Swan’s piece in Axios. Mr. Swan writes:

  • ‘President Biden came into office with a plan for dealing with China that sounded great in theory but's failing in practice.’
  • Reminds me of heavyweight champ Mike Tyson’s quip: ‘Everybody has a plan until they get punched in the mouth.’

However much China may seem to have punched the U.S. in the month – and on that Mr. Swan is correct - theory and practice came together last week.

  • The theory: Bring allies into concert in the U.S. effort to confront China.
  • The practice: ANUKUS

AUKUS, as you have no doubt read, is a new Indo-Pacific security alliance among the U.S., the UK, and Australia – the anglosphere minus Canada and New Zealand.

  • The centerpiece of the new security pact: The U.S. and the UK will equip Australia with at least eight nuclear-powered submarines and transfer U.S. nuclear sub technology (the U.S. has only done that once before, to the UK in 1958).

With this, Australia will become the 7th nation to have such weapons, along with the U.S., the UK, France, India, Russian, & China.

  • (Note: Australia’s new subs will carry conventional – not nuclear – weapons, like long-range Tomahawk missiles. But experts have said that in a pinch, these could be swapped out for nukes.)

The subs won’t be delivered for at least a dozen years.

  • So more immediately, the allies will ‘deepen cooperation on a range of defense capabilities for the 21st century, including artificial intelligence, cyber, quantum technologies, and various undersea capabilities.’

To make the deal, Australia scrapped a contract with France to supply conventional subs.

  • What hurt more than that was that French president Macron was not invited to join the alliance – even the negotiations where kept secret from him.
  • Blindsided and livid, Macron protested and withdrew his ambassadors to the U.S. and Australia.

Throughout all the announcements, the three nations’ leaders never mentioned China as the target of AUKUS.

  • In fact, the three leaders were at some pains to claim: ‘China? China? Never entered our minds.’
  • Their deputies were more direct.

And China, quite rightly from its point of view, squawked.

2 | Why The Subs Are A Big Deal

‘In its previous calculations, China’s military only had to contend with possible interference from the US and Japanese navies as it sought military dominance over its near seas, especially in the waters around Taiwan,’ wrote the Financial Times:

  • Admiral Lee Hsi-ming, a former chief of the general staff of Taiwan’s armed forces, told the FT:

“Nuclear powered submarines give Australia strategic deterrence and attack capabilities for the first time.” ’

  • ‘ “They will be able to not just protect their own sea lanes of communication but deploy far from home. Add to that the Tomahawk missiles, and [Australia’s] fist will reach right to mainland China.” ’
  • ‘Lee added that “the logical area for deployment of those submarines would be the deep waters of the western Pacific [near] Taiwan”.’

‘“There is not much the People’s Liberation Army can do to counter this new capability,” he said.’

  • ‘ “Long-range anti-submarine warfare is one of the most sophisticated and risky operations, and it will take longer for the PLA to master it than it will take for Australia’s nuclear submarines to be built and deployed.” ’

Vipin Narang, a Massachusetts Institute of Technology professor who studies the use of nuclear weapons and delivery systems among major powers, told The New York Times:

  • ‘ “Attack submarines are big deal, and they send a big message,”
  • ‘ “This would be hard to imagine five years ago, and it would have been impossible 10 years ago. And that says a lot about China’s behavior in the region.” ’

Oriana Skylar Mastro, who is a fellow at the Freeman Spogli Institute for International Studies at Stanford University and at the American Enterprise Institute, told The New York Times:

  • ‘ “Nothing is more provocative to China than nuke stuff and submarine stuff." '
  • ' “China’s so weak in anti-submarine warfare in comparison to other capabilities." '
  • ‘ “To me,” said Ms. Mastro, a regular visitor to Australia, “it suggests that Australia is willing to take some real risks in its relationship to stand up to China.” ’

Here’s why Australia is willing to take those risks.

3 | What Got Into Australia?

Of the many headlines that have appeared since AUKUS was announced, one of my favorites is from The New York Times:

From that article:

  • ‘With its move to acquire heavy weaponry and top-secret technology, Australia has thrown in its lot with the United States for generations to come — a “forever partnership,” in Australian PM Morrison’s words.’
  • ‘The agreement will open the way to deeper military ties and higher expectations that Australia would join any military conflict with Beijing.’
  • ‘It’s a big strategic bet that America will prevail in its great-power competition with China and continue to be a dominant and stabilizing force in the Pacific even as the costs increase.’

So why make that bet now? I’ve watched Australia’s relations with its biggest natural resource buyer (and major mine investor), China, because of the interest in commodities of my hedge fund clients.

  • For years, I've watched as Australia has tried to balance its traditional ties with the U.S. with its dependence on China’s buying Australia’s commodity exports such as iron ore for its rapid industrialization.

In 2015, Australia and China agreed to a free-trade deal and that led to record Chinese investment in the country the following year.

  • Soon things went south. For example, Australia alleged that China was interfering in its politics and banned Huawei from its 5G rollout.

Then Australia did the unthinkable:

  • It called for an independent inquiry into the origins of the COVID pandemic.

And China went all ‘wolf warrior’ on Australia:

  • It imposed steep tariffs on Australian barley, suspended beef imports from some Australian slaughterhouses, and slapped antidumping tariffs on Australian wine, among other trade penalties.

In the face of this bullying, Australia has hung tough.

  • And now it’s had enough and is 'betting the house' on the U.S.

Speaking about China’s behavior, Peter Jennings, executive director of think tank Australian Strategic Policy Institute told the AP:

  • ‘ “China is the strategic problem in the region.” ’
  • ‘ “Australia’s decision to acquire nuclear submarines was a response to China’s increasing military might, aggressive bullying of Australia and intimidation of Japan and Taiwan.” ’

‘ “I’m sure Beijing will not like this development but what do they expect? It’s obviously going to be the case that the consequential countries in the region will seek to strengthen themselves in order to deal with a more aggressive China, and frankly that’s what happened with this announcement.” ’

  • ‘ “We should call the first submarine in this new category the ‘Xi Jinping,’ because no person is more responsible for Australia going down this track than the current leader of the Chinese Communist Party.” ’

If other Asian countries begin to stand up to China, this pretty much sums up why.

4 | What Does AUKUS Mean For China?

Here’s a view from China from Li Haidong, a professor at the Institute of International Relations of China Foreign Affairs University, who told the Global Times [a Chinese Communist publication] that AUKUS is at the core of the US alliance system to contain China with extreme hostility, and it should not be underestimated.’

  • ‘ "The US is using the same approach employed to contain Russia in Europe after the Cold War to contain China in the Asia-Pacific region. Washington is building a NATO-like alliance in the region, with AUKUS at the core, and the US-Japan and US-South Korea alliances surrounding it, and the Quad [U.S., Australia, Japan, and India] at the outermost level, because India, not an US ally, can't be trusted by the US," Li said.’
  • Below is a chart that summarizes Dr. Li’s point:

AUKUS

Note: Keep a sharp out for alliances and strengthening of relations among Asia countries, some with no U.S. involvement whatsoever.

  • As Dr. Li stressed: ‘These small groups of alliances can realize mutual reliance and form a big alliance led by the US to contain China. "So the threat and challenge that China is being confronted with are critical and serious," Li stressed.’

If AUKUS is the start of a new world order, the order will be inspired by but not always led by the U.S.

  • And that's a good thing if we want this new world order to be robust and inclusive.
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