The threats to Australia’s economy and democracy are grave but not insurmountable

Australia for decades trusted its prosperity to China while trusting its national security to the US. It was easy. It was comfortable. And it was definitely a racket.

Could it last? The answer, we have learnt with urgent clarity, is, again, no. The racket has fallen apart.

China’s Xi Jinping has made a strategic decision to put Australia’s sovereignty to a sustained test. It’s a political, economic and cyber confrontation so far. We’ve not been so tested since World War II.

Australia, according to the state mouthpiece the Global Times, is “like chewing gum stuck on the bottom of China’s shoe. Sometimes you have to find a stone to rub it off.” And we’re being tested by the very country that bought 38 per cent of all Australia’s exports of goods and services last year.

That’s Australia’s heaviest reliance on any single export market since its naive dependency on Britain in the 1950s and ’60s. That ended badly when Britain dumped Australia to join the European Common Market in 1973. We failed to learn that lesson. Thank goodness that we can trust the US at such a moment. Or can we?

Donald Trump has introduced more uncertainty to America’s alliance system than at any time since it was set up after World War II.

The threshold moment occurred even before he swore the oath of presidential office. It was actually during the 2016 election campaign that he systematically challenged the value of alliances.

By complaining that US allies were a liability and not an asset, he made alliances a campaign issue. Until that moment, US support for its alliances had been bipartisan. Trump politicised them.

Once an issue has been politicised, it’s very hard to depoliticise. An egg’s unitary wholeness, once scrambled, is very hard to unscramble.

The Democrat President-elect Joe Biden is better disposed to the idea of alliances. But even though Trump is due to leave the White House in six weeks, the damage to US trustworthiness will linger.

And remember that both of America’s main political parties may be in the mood to confront China, but America is not in the mood for any new military ventures. Reflecting public sentiment, Barack Obama was fond of saying: “I am the president who ends wars.” Trump campaigned last month on the slogan “We are bringing all the troops home”.

Should Australia somehow find itself in a hot war with China, there is less certainty than ever that our great and powerful friend will save us. America is still our friend. But it’s not feeling so great and it’s not so powerful compared with China any more.

This is not an argument for breaking off the alliance. It remains a national asset and we’d be foolish to discard it. But it does mean that Australia needs to have a Plan B.

Which, of course, it’s only just begun to seek. The Morrison government threw out its defence policy in July and announced a new one with urgent emphasis on deterrence. Long-range missiles, for instance. And Morrison is scrambling to build new arrangements with a wide array of countries while a global backlash against Xi’s aggression is gathering.

Loading

And yet the Prime Minister spelled out the gravity of Australia’s situation: “We have been a favoured isle, with many natural advantages for many decades,” said Scott Morrison.

“But we have not seen the conflation of global, economic and strategic uncertainty now being experienced here in Australia in our region since the existential threat we faced when the global and regional order collapsed in the 1930s and 1940s.”

The country we trusted for our prosperity is now our greatest challenger. Xi seeks to use our China trade as his pressure point to break us.

And the country we trusted for our security is a less reliable ally than Australia has experienced since the Anzus treaty was signed in 1951.

The racket has ended. We can no longer rely on the goodwill of foreign powers to supply prosperity or security for us. To remain passive is to lose both.

The good news is that this is surmountable. There are two quick case studies. First, plucky Taiwan. It has the same population size as Australia. And it has the same degree of export dependency on China, about 40 per cent pre-pandemic. The US sells Taiwan weaponry but is not a treaty ally.

Beijing has been bullying Taiwan for decades, threatening to invade, imposing trade sanctions, pressing countries worldwide to cut it off. Last year Xi Jinping cut off China’s tourism traffic to Taiwan, threatened to invade (again) and then interfered in Taiwan’s January election. All this was an effort to remove Taiwan’s pro-independence leader, President Tsai Ing-wen.

Did Taiwan yield? Of course not. Xi’s intimidation, coercion and interference backfired and Tsai Ing-wen was re-elected with a slightly increased share of the vote. “Democratic Taiwan and our democratically elected government will not concede to threats and intimidation,” she said. And Taiwan’s longstanding wariness of China helped it to detect and defeat the COVID-19 outbreak with just seven dead.

Loading

Second, Australia. When Britain dumped Australia to join the European Common Market in 1973, it was a bitter betrayal. London switched all its trade preferences away from Australia and towards Europe. The economic effects were a real shock. Australian apple exports fell by 90 per cent, butter by 70, for instance.

Did Australia collapse? Of course not. It turned out to be a galvanising shock that energised Australia to engage Asia. Whatever trade embargoes Xi imposes on Australia now, we should look to 1973 and remember that we’ve done it before.

That’s no consolation to the companies that are losing money, and the Morrison government is now examining ways to help them cope. But our own recent history counsels optimism, not despair. The situation is grave. It is not hopeless.

In Donald Horne’s 1976 follow-up, Death of a Lucky Country, he wrote: “In the lucky style we have never ‘earned’ our democracy. We simply went along with some British habits.”

This isn’t quite right. Australia joined alliances and fought wars to defend democracy against fascism. In World War II and again in the coalition to defeat Daesh, the so-called Islamic State.
But today Australia’s democracy is under severe challenge. Our sovereignty and our liberties depend on our will and wits. Democracy worldwide is in retreat. If there’s ever a time to earn our democracy, it is now.