A strategic defence update highlights ‘coercive tactics’ that skirt the threshold of armed conflict but justify a huge weapons build-up by Australia. By Karen Middleton.

Cold War: ‘Grey zone’ to define relations with China

Australia is embarking on the 21st-century version of a Cold War weapons build-up to deter growing regional threats – particularly from China – in an era when undeclared diplomatic, trade and cyber hostilities are blurring the lines between war and peace.

A strategic defence update, unveiled this week, highlights a growing “grey zone” of belligerent actions that deliberately stop short of shots fired and war declared.

“Nations are increasingly employing coercive tactics that fall below the threshold of armed conflict,” Defence Minister Linda Reynolds told the Australian Strategic Policy Institute (ASPI) on Thursday.

“Cyber attacks, foreign interference and economic pressure seek to exploit the grey area between peace and war.

“In the grey zone, when the screws are tightened, influence becomes interference, economic co-operation becomes coercion and investment becomes entrapment.”

Analysts say there are echoes of an earlier era in Australia’s new strategy.

“In some ways, it’s a new version of what the Cold War provided,” says Jacinta Carroll, visiting fellow at the Australian National University’s National Security College.

“… The grey zone is not just about ‘when do we know whether this is war or not?’ It is about using every advantage you have across the spectrum of national power in order to create advantage with less effort [than military conflict] and minimising harm to yourself.”

The strategic update confirms the Covid-19 pandemic has heightened regional instability and the risk of outright conflict, which the update says is still “unlikely”, although increasingly “less remote”.

It describes how the pandemic has exposed Australia’s supply-chain vulnerabilities, prompting a decision to manufacture more munitions on Australian soil and for the country to become more militarily self-reliant.

Covid-19 has also prompted some hostile nations and networks to mount operations that take advantage of economic and social upheaval in key parts of the world.

“There are certain actors who are making hay during this economic instability, during the pandemic,” Reynolds told ASPI on Thursday during a panel discussion on the strategic update and the new force structure plan, both released a day earlier.

Neither the strategic documents nor the speeches Reynolds and Prime Minister Scott Morrison have made about them attempted to downplay the situation.

Morrison likened the global circumstances in 2020 to those of the 1930s, when the Spanish flu pandemic of 1918-20 had wreaked havoc and created economic uncertainty, while the rules-based order was deteriorating at a time of great technological change.

What followed was the rise of Adolf Hitler’s Third Reich in Germany and ultimately World War II.

Reynolds said the analogy was made “very deliberately” as a warning.

Australia’s most recent defence white paper, published in 2016, acknowledged the need to adapt to rapidly changing strategic circumstances, but change had come much faster than expected, Reynolds said.

She said the white paper had flagged the need to prepare for high-tech future conflicts.

“Ladies and gentlemen,” she told ASPI, “that future is now.”

The update is a fast alternative to a full-blown white paper, which Jacinta Carroll says is usually based on strategic assessments from two years earlier.

That means the assessments in the 2016 white paper were based on the geopolitical situation in 2014, when Australia’s relations with China were so warm President Xi Jinping was invited to address parliament in Canberra.

Relations have deteriorated significantly in the past six years, and China’s posture has changed.

No longer an outsider seeking approval from the rest of the world, China has become increasingly overt in its hostility to democratic powers.

As Hong Kong marked the 23rd anniversary of its transfer from British to Chinese rule this week, Beijing rammed through a hardline national security law designed to stamp out dissent, contravening rule-of-law undertakings it gave at the time it took over.

The move prompted both Britain and Australia to consider offering asylum to some Hong Kongers.

Professor John Blaxland, professor of international security and intelligence studies at the ANU, says China is being deliberately provocative with other countries while avoiding crossing the line to outright military conflict.

“We have to live with the … tension, with the fact that we’re dealing with a spectrum between co-operation, contestation and conflict,” he says.

“It’s a sliding scale. There is no hard demarcation, except when somebody physically pulls a trigger.”

General Angus Campbell, chief of the Australian Defence Force, this week described the challenge that grey-zone activities pose when determining how to meet undeclared attacks. He told ASPI the grey zone required Australian defence planners to think laterally.

“I think we have to think grey if we are to effectively respond to grey – in the way that is suitable for us and appropriate for the nature of our democracy and our values,” he said.

The strategic update outlines the planned expansion of Australia’s traditional defence domains beyond land, air and sea to now include information and cyber, and space.

It details $270 billion in hardware investments over the next decade, emphasising submarines and other naval assets, intelligence, sovereign-owned satellites and, for the first time, long-range missiles to tackle would-be attackers and their infrastructure away from Australian shores.

The spending is part of a $575 billion 10-year defence budget, which shifts Australia’s focus squarely to the Indo–Pacific region and foreshadows less willingness to support military efforts elsewhere.

The government insists the alliance with its most important strategic partner – the United States – remains as strong as ever. But some are interpreting the new emphasis on self-reliance as a quiet acknowledgement that the US is becoming less reliable.

Reynolds rejected that analysis.

“The United States is still the bedrock of peace and prosperity in our region,” she told ASPI. “[But] no one nation could or should soldier the responsibility for the rest of us.”

Despite this, John Blaxland detects concern about the US.

“No one wants to say that,” he says. “You don’t want to offend the Americans, and you don’t want to make it worse.”

And while the strategic update highlights the US–Australian alliance and tensions between the US and China, it does not single out China as an aggressor. Morrison also avoided doing so during the launch.

“Now we must face that reality, understanding that we have moved into a new and less benign strategic area,” he said, “one in which the institutions and patterns of co-operation that have benefited our prosperity and security for decades are now under increasing – and I would suggest almost irreversible – strain.”

But during her ASPI speech, Reynolds deliberately singled out the north Asian superpower, whose Foreign Ministry had responded to the strategic update by saying all countries “should avoid military competition and stop purchasing unnecessary military equipment”.

“Australia has watched closely as China has actively sought to gain greater influence in the Indo–Pacific,” Reynolds said, noting that China’s “most consequential bilateral relationship” in the region – with the US – was “increasingly characterised by competition”.

“We have supported China where that pursuit advances mutual interests in security, in prosperity and in stability,” the Defence minister said. “And where such actions have unsettled the stability of our region, we have joined with others in clearly expressing our concerns.”

Reynolds noted concerns about regional “developments” that undermined other countries’ sovereignty and contravened international law – an apparent reference to China’s activities in the South China Sea – and said these were based on non-negotiable Australian values.

Both Jacinta Carroll and John Blaxland agree with the minister that Australia’s repositioning is not just about China.

Carroll points to Russia and other aggressors and says the acquisition of new weapons is a show of strength designed to make anyone think twice about moving beyond the grey zone to outright conflict with Australia or its neighbours.

“It’s very important for Australia to stand up and say, ‘Well, we actually should all be able to run our own countries, we should be able to share this region without [others] pushing anyone around,’ ” she says.

While defence traditionally attracts bipartisan support, the strategic update – and possibly its timing – was not devoid of domestic politicking.

“Our nation’s security needs to be bipartisan,” shadow Defence minister Richard Marles said. “It must be above the political soap opera of the moment. But it is very important that the opposition of the day holds the government to account in the delivery of its promise.”

He said the Future Submarines project must be delivered on time and on budget.

Prime Minister Morrison emphasised how much Coalition governments have spent on defence compared with Labor.

With this weekend seeing a crucial byelection in the marginal Labor-held seat of Eden-Monaro, home to both the ADF’s Joint Operations Command and a defence facility, it seems neither party could resist lowering their gaze, briefly, to horizons closer to home.

This article was first published in the print edition of The Saturday Paper on July 4, 2020 as "Cold War: ‘Grey zone’ to define relations with China".

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