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A desire for Australia to become a top-10 weapons exporter is partly strategic and partly a rhetorical flourish. By Karen Middleton.

Part Two: Selling arms

Then Defence Industry minister Christopher Pyne at a Sydney maritime show in 2017. AAP / Dan Himbrichts
Credit: AAP / Dan Himbrichts

Australia’s multibillion-dollar defence exports strategy was born in a trade-show booth in the United Arab Emirates, on borrowed chairs and fuelled by donated coffee.

Abu Dhabi’s Crown Prince Mohamed bin Zayed al Nahyan, also known as MBZ, sent word at short notice that he would drop by Australia’s stand at the February 2017 International Defence Exhibition. He was hoping to meet the visiting Defence Industry minister, Christopher Pyne, to discuss exports and military ties.

Pyne was mortified at having to meet an important figure in a poky booth. It highlighted what he considered to be Australia’s undercooked representation among the big arms dealers on the trade show floor.

“We had to go and find some chairs,” Pyne tells The Saturday Paper. “We had no coffee machine.” The layout in the display area was alphabetical, Pyne recalls: “The Austrians had to give us two short blacks.”

Pyne returned home and asked Defence how much Australia spent promoting its defence exports and was flabbergasted at the response. “The answer came back: $1 million.”

Pyne says he decided on the spot to boost Australia’s defence industry and raise its profile. A year later, Australia’s defence export strategy was announced, including $20 million redirected annually from the defence budget to support the local industry.

In late January 2018, then prime minister Malcolm Turnbull, alongside Pyne and then Defence minister Marise Payne, unveiled Australia’s new ambition to become a top-10 global defence exporter.

“Australia is around 20th as an exporter of defence industry,” Turnbull said at the time. “Given the size of our defence budget we should be a lot higher up the scale than that, so the goal is to get into the top 10. That’s the ambition. We are underdone in terms of our defence industry, historically and particularly with exports.”

At the time, the sector hailed the objective as “ambitious but achievable”. But in September last year, the Australian National Audit Office queried the basis for the government’s ambition.

The audit report criticised both the government and the Defence Department, saying the strategy’s objectives and initiatives were based on research but “not informed by robust defence export data”.

The report said the objective of becoming a top-10 exporter “reflects an announcement by the minister for Defence Industry and was not supported by analysis or data”.

The auditor-general wasn’t able to tell if the strategy’s objectives had been achieved because Defence had “not established a performance framework or effective reporting arrangements to measure progress”.

Nevertheless, Australia has been creeping up the list of defence exporters in the three years since the strategy was announced. The local industry is estimated to have grown by as much as $4 billion over that period.

The latest annual rankings of arms traders published by the respected Stockholm International Peace Research Institute now puts Australia 16th among defence exporters, and fourth among importers, the latter largely due to F-35 joint strike fighter aircraft imports.

Over the past couple of years, the government’s focus on the defence industry has increased, due to the combined impact of the Covid-19 pandemic and the nation’s changing strategic circumstances.

The pandemic exposed gaps in Australia’s sovereign capabilities and supply chains and highlighted which infrastructure and other assets needed extra protection to avoid the country being crippled in a future security crisis.

Australian National University professor of international security and intelligence studies John Blaxland says oil and other energy supplies, internet cables and satellite services are among the essential assets that need to be protected from attack.

“These are things that we’re actually not well placed to protect at the moment at all,” he says.

The emergence of China as a strategic threat and its growing influence in the Indo-Pacific region has also prompted a reassessment of Australia’s military needs. This has forced a rethink on military self-reliance.

One reason for Australia’s ambition on military exports is that the country’s day-to-day defence needs are relatively small – and its manufacturing industry can’t just be switched on and off when required. As such, scale demands that hardware and munitions be exported.

Defence analysts argue that maintaining access to the necessary equipment and munitions requires production onshore by reliable companies that retain qualified workers with up-to-date skills.

Pyne says the “top 10” exporter ambition was set so there was a firm goal. Blaxland sees it as little more than rhetorical flourish.

“I think it’s a grand, non-specific, aspirational concept that might help make people feel better and might help steer some defence investment towards facilitating greater local innovation and production,” Blaxland says. “If that happens, great. Beyond that, I don’t place much faith in it.”

Military exports are highly sensitive and there are local and global rules governing what can and cannot be sold and to whom.

“You don’t want to sell rifles to Myanmar,” Blaxland says, “because they’re not going to be used against an external threat, they’re going to be used on their own people.”

There is also a basic definitional question: what constitutes a weapon?

“For example,” Blaxland says, “an unattended ground vehicle that can operate to help with fighting fires, depending on what piece of kit you put at the end on the top nozzle – is it a hose or a machine gun? There’s not that much difference technologically between those two options.”

Technology increasingly has multiple applications – both civil and military – and it is difficult to be certain that something sold for one purpose will not be used for another.

The Australian government has faced criticism for providing export permits for sales to the United Arab Emirates and Saudi Arabia over the past 18 months, both of which have been engaged in the conflict in Yemen.

Where things get really complicated in the export control system is in contemplating selling to countries with which Australia needs to work closely but which have flawed human rights records.

“This is one of the key concerns – human rights concerns – that’s affected Australia’s defence international exports strategy,” Blaxland says. “We, as an open, liberal Western democracy, don’t want to be seen to be aiding and abetting kleptocratic authoritarian despots. And yet many of our partners – security partners in the neighbourhood – have not exactly stellar clean-sheet democratic records. They’ve got slightly patchy records when it comes to human rights.”

Australia has a dilemma in selling to countries such as Indonesia, which faces strong criticism for its activities in places including Papua, Sulawesi and Aceh.

“On the balance of things,” Blaxland asks, “is it more important for us to bolster our relationship with that regional security partner, and maybe hold our nose at the risk that this enterprise might be generating, because the perceived benefits of engagement outweigh the perceived negative consequences?”

He says that dilemma can only be resolved “item by item, circumstance by circumstance”.

Proponents of bolstering the local defence industry for strategic reasons argue that it’s better for Australia to sell something to a neighbour than have them turn to poorer-quality goods or riskier sources – an argument that is also used to defend coal exports. They insist there are other benefits that are more than financial.

“If you get a regional partner to acquire a system from Australia, then there is a relationship that opens up between our two countries for maintenance, for system upgrades, for interoperability checking and for exercising together,” Blaxland says.

“[When we] say, ‘Well, we won’t sell it to the Indonesians, we’ll let the Russians do it instead’, what we’re also saying is, ‘Well, we’ll let them have that relationship with Russia rather than with us.’ So, it’s always more than one dimension to the equation.”

Peace activists argue the equation is simpler. “We shouldn’t be selling to anyone who is committing human rights abuses,” says Margaret Pestorius, spokesperson for the Wage Peace anti-militarist group, “which is an awful lot of countries.”

Pestorius and others who oppose the burgeoning defence exports industry and the general proliferation of armaments argue too many vested interests favour war over peace.

“The way it acts in the world means that it promotes conflict,” Pestorius says of the industry. “It doesn’t promote diplomacy. Their business is to sell weapons into conflicts … And they are pushing for a conflict-oriented world, rather than a world of diplomacy and co-operation and collaboration between states.”

The now former secretary of the Department of Foreign Affairs and Trade, Frances Adamson, reflected on the link between diplomacy and defence acquisition on Wednesday, in a farewell address to the National Press Club.

Adamson said diplomacy needed serious funding because it prevented “the fracturing and instability that leads to vastly more expensive and more destructive tools of statecraft being required”.

She said Defence Force chief Angus Campbell once told her that if her department was effective he could, “keep his expensive tools in the shed”.

Her remark underscored the fact that diplomacy may prevent the need to use the tools, but it doesn’t necessarily stop them being purchased.

Margaret Pestorius, who has a 30-year history of peace activism, says Wage Peace’s goal is to “build the capacity of ordinary people to be able to stand inside the discourse”.

Her group and others mounted a protest outside this month’s Land Forces defence industry exhibition in Brisbane, the first military trade show in Australia since the pandemic. Thirty-seven protesters were arrested.

Pestorius says government is too close to defence manufacturers. “You have the situation of the revolving doors, where people are now moving from the ADF as generals onto the boards of the military industry.”

She also criticises the pathway of ministers moving from government into lobbying for defence corporations, citing the likes of former Defence minister Brendan Nelson, who now works for Boeing, and Christopher Pyne.

Pyne left politics in 2019 and runs a consultancy with defence companies among his clients, including the Israeli military technology company Elbit. Elbit’s digital battle management system, used by the Australian Army for a decade, was removed recently because of security concerns identified by the Australian Signals Directorate.

The company has since been shortlisted for a separate contract for the Land 125 technological warfare system.

Pestorius says the lobbying ties of Pyne and others are too cosy. “His job now is to assist those people to use the system that he set up.”

But Pyne rejects the criticism. Out of politics, he is working for the same export goals he set when he was in it. “I comply with all the rules,” he said, “and have done so fastidiously.” 

This is the final part of a two-part series. To read part one, on defence procurement, go to Part One: Australia’s big spending on war machines

This article was first published in the print edition of The Saturday Paper on Jun 26, 2021 as "Part Two: Selling arms".

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Karen Middleton is The Saturday Paper’s chief political correspondent.