The Strategic Environment of the US-Australia Alliance in the Indo-Pacific Era

The strategic environment is best likened to an ever-changing river that consists of a myriad of interacting currents residing at various depths and moving with different speeds. Shaping this environment effectively is not the same as causing changes or making differences, but is similar to swimming efficiently in this river. The most powerful currents in this river are related to climate, demographic, technological and economic changes, great power relations, big catastrophes, and human dynamics. The ongoing COVID-19 pandemic will have the largest impact on the strategic environment in the short to medium term. Although the directions of many changes brought about by the global plague are still unfathomable as the pandemic continues to unfold, four trends accelerated by the pandemic—the growth in importance of the cyber domain, the bifurcation of the world economy, the intensification of great power competition, and the transformation of international architecture—are constituting the shape of things to come. In the medium to long term, the hegemonic contest between China and the United States will have the largest impact on the strategic environment. Metaphorically speaking, it is creating the largest vortex in the river that is the strategic environment. East Asia and Australia will be drawn into this vortex even against the best effort to stay outside. This chapter argues that, contrary to the belief of many, there is no Thucydides Trap—the structural cause of war—in this hegemonic contest because it is structured as a game of chicken, not a prisoner’s dilemma. It is important for any player in this environment to recognize the strategic structure of the US-PRC hegemonic contest and apply the best strategy for it as suggested by this structure. China has masterfully played the game of chicken with its gray zone tactics, its pursuit of ‘war by other means’, i.e., its weaponization of the non-military, even of risks. The US-PRC hegemonic contest will not resemble the Cold War much beyond this strategic structure. It will be very different from the Cold War in important aspects, including the ideological and economic realm. Most strikingly, the main front lines of the contest will be in the maritime and cyber domains and, consequently, will be far more fluid and unstable than those of the Cold War.