An insecure world

Helen Keller wrote that “Security is mostly a superstition, It does not exist in nature.” She was right, or at the least security is a statistical illusion. If Alfred crosses the Queensland coast around Brisbane it will have been 51 years since Cyclone Wanda caused the 74 floods, and 71 years since the 1954 Great Gold Coast cyclone.

Two in thirty years, but none since, so the illusion of security is retained.

If, like me, you are sitting in SEQ waiting for this storm to arrive, all the best, and your best is all that you can do. Fortunately we live in a well-resourced society that can provide some level of security if the worst occurs, despite your best. But like nature, outside the present circumstances, a lot of that security is an illusion.

I want to talk about some of those areas where security is decreasing, or where it might seem at risk.

Are we almost there yet?

One of those areas of increasing insecurity is electricity. We’ve taken a strong stance in favour of nuclear generation, given that most of the population has an aversion to emitting CO2. It’s the most economical way of providing on-demand electricity – the sort of electricity a modern economy needs to run – with negligible emissions.

As a result of this we’ve hosted business briefings, as well as lunch functions, like this one back in 2023 with Will Shackel, the Brisbane teenager leading Australia’s most high profile pro-nuclear campaign.

 As part of our campaign, on Tuesday March 25 we will be hosting a lunchtime discussion at the Brisbane Club on nuclear energy, featuring Australia’s “Mr Nuclear” Adi Patterson, and Queensland’s local expert, Adjunct Professor Stephen Wilson. The discussion is entitled “Are we almost there yet?” and will possibly occur at a critical juncture in the federal election campaign (Cyclone Alfred willing).

To book click here.

Trump and the New World Order

While Trump’s Oval Office dust-up with Volodymyr Zelenskyy may seem to reset the security environment, nothing much has really changed – Australia’s security position is weak and needs to be radically improved. We’re used to relying on great and powerful friends, but those friends have always put self-interest before ours.

Again, statistical complacency gets in the way of good analysis.

It is only for the last 80 years that the US has been a reliable security guarantee, possibly because in a bipolar world, it was one of the poles, and then there was the unipolar moment where it had no real rivals at all. Before WWI it was isolationist and had to be coaxed to join the war, and in WWII it was the Japanese miscalculation that brought her in.

Trump is following historical precedent in following a more isolationist path. And he has good financial cause to be more isolationist. The US beneficence has fluctuated in line with its economic dominance – a recognition that resources are limited.

Before WWI the US was the equal largest economy in the world, at 19-22% of global GDP, virtually the same as the British Empire with 20-25%. Before WWII she was 50% larger than the Empire at 28-33% versus 15-18%

In 1945 it is estimated that the USA produced 40-50% of world GDP. Today that is more like 15%. The Russian economy was 10-15% at the same time, now it is 1.92% (slightly higher than Australia’s 1.64%). China was 4-5% in 1950 and now rivals the USA.

It is one thing to rule the world when you are twice as large in relative terms as the British Empire ever was, another when you are a third that relative size, and your geo-strategic rival is the same size as you. But size is not all that matters, how you allocate your resources also counts.

Sir Niall Ferguson has coined Ferguson’s Law which states that “any great power that spends more on debt servicing than on defense risks ceasing to be a great power”. He derives this from the work of 18th Century Scottish economist Adam Ferguson.

According to Niall Ferguson, that inflection point towards decline was reached by the USA in 2024.

Looking at just these two factors, any country that relies primarily on the USA for its defence is living an illusion. And if we invert that, any president of the United States who thinks the USA can continue to play its international role the way it has since 1945 is also living an illusion.

Donald Trump might be the great fabulist, but his achievements suggest he is well-connected to reality. Property development is a brutal business – you can’t succeed in it for long if you are unmoored from facts.

Trump 2.0 is different from Trump 1.0. First time around he was the Apprentice. He had no experience in government at any level, and although he had political connections they were mostly social or lobbying, and with mostly Democrat politicians. But he is a quick learner.

His loss and 4 years in what you might call either opposition, or exile, refined those learnings.

Here are some things he appears to have learned that are most pertinent to what we are seeing at the moment.

• A president may have as little as two years to cement his program before he loses the majority in one or both houses of congress at the midterm elections, so he must plan and act decisively and urgently.
• Loyalty and competence are key requirements for members of his cabinet, along with  alignment to his priorities, preferably married to a pre-existing public reputation and communication skills. Members should also be “best in class”.
• While apparently robust, the business called the United States is in danger of falling into decline and bankruptcy, hence Make America Great Again has even greater urgency this time around.
• The “normal” rules of engagement are definitely suited to success in this environment, so break even more of them this time.
• Free speech is the paramount American value, but it cannot be exercised without a high degree of transparency. For free speech to flourish the MSM must be made obsolete.

What does this tell us about the Zelensky sausage factory (to borrow a phrase attributed to Otto von Bismarck)?

I believe that Trump is most concerned about China, as the size of their economies and defence forces and the quality of their technologies suggests he should be. He is also concerned about the Eurasian axis of Russia, Iran and China, which provides China with access to considerable resources.

On the other hand, he sees a war in the Ukraine that, like the war on the Korean peninsula, has bogged down, with no realistic prospect of either side winning unconditionally.

At the same time the countries with the biggest stake in what happens in Ukraine are spending less than their needs on defence and expecting the US to bridge the gap.

So he throws down the gauntlet to Zelenskyy and Europe. The USA isn’t prepared to go any further than a ceasefire and a deal on minerals, whether you like it or not, but you can always try going it on your own if you really want to.

The USA also needs to rebuild its offensive capability, so let’s do a deal to joint venture a rare earths industry in Ukraine. That will bring wealth to both countries, as well as plugging a hole in the US defence logistics chain, giving it a tangible financial interest in Ukraine that it doesn’t have now and hopefully deterring further Russian aggression.

At the same time, if he can make the relationship with Putin more normal, he might be able to prize Russia away from being merely a client state of China and so damage the Eurasian Axis.  

The extraordinary scene in the Whitehouse may have broken the usual norms of diplomacy, but that’s in line with Trump’s radical approach to transparency and norms. Zelenskyy pushed the boundaries, and then Trump gave him a dressing down that echoed around the world.

Trump’s first presidency was defined by Twitter, which let you know what he was “thinking” at all times of the day. His second campaign used an even greater engagement with social media, as well as with the podcasters of the new media who, like Joe Rogan, are garnering audiences larger than many of the cable networks. These podcasters use the long form interview (listen to Trump with Rogan for an enlightening example of this).

The exchange with Zelenskyy was long-form, reality TV diplomacy, including a Big Brother finale for Zelenskyy. Whether this particular episode worked to Trump’s advantage is debatable, but it had the desired effect of shaking things up.

With the prospects of a ceasefire in Ukraine, Trump is now pushing to end the war in Gaza. Here he can see a prospect for complete victory and when it is achieved, he frees up his most potent military ally Israel to concentrate on containing Iran.

Which allows him to concentrate on China and an Indo-Pacific pivot.

At the same time, he is signalling renewed military resolve.

Totemically it is partly through his abolition of Diversity Equity and Inclusion programs across the whole of government as well as the army, and the banning of transgender soldiers. This says we’re about fighting, not virtue signalling.

But it is also to be the beneficiary of much of his reform of government, particularly that occurring under Elon Musk.

We must not forget that Musk is not just a technologist, but an industrialist, and a large part of the military risk is that the industrial military complex produces products, which in many cases are no longer best of class, in too few numbers at too high a cost.

Musk knows all about the failings of US manufacturing as he builds around 40% of all Teslas in China.

The DOGE (Department of Government Efficiency) exercise, which Musk heads, while it is primarily aimed at radically reducing government expenditure, which will have the collateral effect of starting to address America’s violation of Ferguson’s law.

Musk is also looking closely at defence expenditure. The man who reinvented the motor car and sends more things into space than anyone else in the history of the world, should have insights that can help to improve the US Defence materiel problem.

At the same time Trump announces he wants to rebuild military and commercial shipbuilding in the USA. He must be acutely aware that the Chinese shipbuilding industry has 230 times the capacity of the US and represents 50% of total world capacity. While the US is protected by two coasts, it is obvious Trump doesn’t intend to allow it to rely on splendid isolation as its defence policy. A big navy speaks of a determination to project force abroad.

Which is good news for Australia. First because there are real issues as to whether the AUKUS submarines can actually be built for us, given the US cannot currently meet its own submarine needs. This change in policy might actually make AUKUS possible.

Second, because naval bases here help to project existing and potential US power where it is needed, and they also provide a strategic interest the US might want to protect.

Trump’s tariffs can also be seen as an attempt in the same vein to equip the US for potential war. It needs domestic manufacturing to be able to credibly project power. Of course they serve other purposes, including raising revenue, and as leverage for extracting concessions from trading partners.

Trump is threatening tariffs against Australia, along with most of its allies. Given the US is in trade surplus with us, we have more leverage than most, but an enhanced defence posture might be a win/win that could sweeten the deal for Trump, giving him something to brag about, while giving us more than it gives him.

Which brings me back to our defence needs. While the US alliance is important, and I think actually more reliable for us under Trump than his predecessorwe have to look after ourselves.

Peter Dutton senses this and has promised to buy an extra 28 F-35A Lightning II fighter jets, if elected. But that is a long way short of what Australia needs. We’re a country approximately the same size as Ukraine, but could we have mounted the defence that they have?

We need a complete rethink, and an immediate increase in the defence budget, over and above what we have committed on AUKUS, to rearm.

How do we do this? Well, whoever is the next PM should be looking at the US approach. Not to replicate it, but to learn from it. We should also steer clear of the temptation to judge Trump on what the mainstream media experts, and the left-wing say about him. There is method in his madness, as we can see around us as the world pivots to more defence self-reliance or at least acknowledges that is what they should do.

It's something previous presidents have pushed for, but without success.

Regards,

GRAHAM YOUNG
EXECUTIVE DIRECTOR