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Where fools rush in: The Leasing of the Port of Darwin and the Rise of China

By Dr Strobe Driver

Recently on the ABC’s Lateline,[1] Adam Giles the Chief Minister of the Northern Territory (NT) explained the reasons why the lease of the Port of Darwin—to a Chinese company, Landbridge Group—took place. And while the ‘deal has delivered the NT government a half-a-billion-dollar windfall, the port’s privatisation has raised anxieties about Chinese investment in a strategically important piece of Australia’s infrastructure,’[2] and moreover, there are other issues that the lease raises. Aside from the emotive nationalistic murmurings associated with the port being, and remaining, an Australian-owned -operated asset, which it must be said is now a redundant argument, due to Australia being part of the World Trade Organisation; believes in a free-market economy; is in favour of globalisation; and is the active participant in the breaking down of trade barriers, the lease is part of the of the trajectory of Australia’s commodity trading. All of the aforementioned elements were commenced by the Fraser government in the mid-1970s, and have been enthusiastically embraced by both federal and state governments ever since. The Port of Darwin lease is nonetheless, a step in the direction of implicating Australia in the new geo-strategic reverberations of China’s rise in the Asia-Pacific (A-P); and from a geo-strategic perspective can be placed on a par with the conjoining of Australia to the post-World War Two (WWII) geo-strategic ambitions of the United States of America (US)—in which Australia served and became involved in the US’ ambitions, rather than establishing a more independent and forthright position within the region. Thus, the lease of the Port of Darwin is a step in the direction of conjoining to another actor’s ambitions in the region—in this case China. The lease of the port is a decision of such magnitude that it will come to haunt Australian politics for years to come; and will incrementally and then exponentially ensnare consecutive Australian governments in A-P dilemmas as the rise of China gathers pace.

On the same program that Chief Minister Giles was interviewed, Peter Jennings of the Australian Strategic Policy Institute stated, “We have a China which is becoming increasingly assertive in the South China Sea and it’s very difficult to know how this is going play out and that should have factored into our considerations about a 99-year lease. Unlike Australia, unlike the US, the Chinese Communist Party has the capacity when it needs to reach into the operations of Chinese business whenever it suits it to do so …”[3]. These words resonate within the structure of openness that the Chinese government has set out to achieve through the prism of trade and the result has been success growth in countries from Australia to Brazil, making it indispensable to the world[4]. From this paradigm China has set out to establish an ongoing international presence comparable to the British during their Industrial Revolution; and the US during its post-WWII expansion. However, at this stage it has been largely non-violent in terms of its international ambitions. What the Chinese government has accomplished through the prudent use of fiscal/monetary policies is to move China’s companies into the Asia-Pacific region and in doing so, have established a quasi-political and –strategic presence through these companies. This has, and continues to produce a geo-strategic environment that has essentially, been sponsored by its fiscal generosity.

To be certain, China is not the first to indulge in such a focussed foreign policy, as the US would do so with the post-WWII Bretton-Woods system[5] which tied world currency and therefore trade to the US dollar in 1949; the US taking over Guam and Diego Garcia; the British invading India and securing Northern Ireland in order to secure international resources and regional security; the French invading Indo-China and Algeria; and to balance the argument somewhat, Russia invading the Eastern-bloc countries circa-1950. All are representations of focussed and (often) violent foreign policy initiatives. The difference between what has gone before is that China is expanding in a world where communication and therefore, geo-political comment cum observation is much more robust, and there is much more information ‘out there.’ Governments are more aware of their actions and are therefore, able to make more enlightened decisions as the repercussions are understood more thoroughly. This said however, does not preclude there are many dangers in the decision of the NT government and whilst the decision has been made by sheer immediate economic advantage for the NT, it has also been made without any consideration for the future security of Australia per se. To assume that the lease will not place Australia in a very precarious position in the future is to be blind to the obvious intent of how countries prepare their strategic environment/s; secure their geo-strategic advantage more generally; and establish their regional advantage far into the future. All of these components are what the NT government has blithely ignored in the leasing process.

Australia, through the manoeuvrings of the economic world market, and due to the NT government’s desire for a form of fiscal independence—under the auspices of ‘self-reliance’ reducing the NT from 80 percent (%) to 71% of Federal funding[6]—is why the lease was deemed to be fiscally responsible. ‘Fiscal responsibility’ however, is only one aspect of understanding what is happening in the A-P region—a region that will increasingly become friction-filled as China demands its ‘rights.’ It is the interlinking of the rise of China, its trajectory of dominance, and the lease of the port and the direct frictions for Australia that will be created from the juxtapositions of these three elements that is of interest here. The assumption within the framework of the NT government making such a momentous decision hinges on several assumptions: that the status quo will remain static, that is, US-Australia agreements will remain unsullied by the rise of China; Indonesia will be a relatively passive neighbour; the Philippines will continually side with the US; and Oceania’s governments will not exert political pressure on Australia to accept China’s foreign policy ambitions in the region. There are far too many variables to mention suffice to state the region will be in a dynamic flux, especially over the next two decades and moreover, China will steadily assert an enormous and continuous influence, as regional machinations unfold. This acknowledged, and in order to give the lease of the port a greater perspective of why the dangers associated with the leasing of it will come to the fore, a brief historical observation of why ruling sea-lanes—and the ports that are within them—are such a vital part of power-projection is needed. In observing what has gone before will highlight that if China decides to take a more robust (and possibly violent) geo-strategic pathway to realise its ambitions, Australia’s Port of Darwin will be one of the key areas impacted upon by its goals.

Post-WWII the US exploited its newfound power-base and as part of countering the Soviet threat, moved closer to Russia, establishing Okinawa as a quasi-suzerain state of the US, as it offered a rapid mobile presence for its naval forces and quick access to the Taiwan Strait, Sea of Japan and the Pacific Ocean. This geo-strategic approach, of having ports in another country stymied Russian regional ambitions becoming eventuating. The US, with varying degrees of political and direct force then shifted into Diego Garcia, Guam and the United Arab Emirates,[7] as well as other Middle Eastern countries. To be sure, this process, of stablishing military ‘footprints’ was a learned experience from the British and was a process which served consecutive British governments well when utilizing force-projection; and allowing for military force to be easily accessed if necessary. The British fundamentally understood the most effective way in which to rule the world was through sea-power, and enforced this in a multitude of effective ways. The paradigm alluded to, whilst being a somewhat lengthy explanation does offer an historical insight into the way in which the British treated access to what they perceived as their territory, cum territorial rights. The way in which the British projected their force is as follows . . .

 

The British practice of warfare from the sixteenth century to World War 1 was to employ…[a] way of war [which] de-emphasized direct confrontation, concentration, mass, and battle and emphasized surprise, mobility, manoeuvre, peripheral attacks on the enemy weaknesses, dispersion, conversion of resources, and negotiated settlements … The British used sea power primarily to achieve their limited strategic objectives. They traditionally fought low-expenditure, high-gain wars that took advantage of Britain’s geographic circumstances that exploited those of its enemy. The British way of war was to destroy when possible the enemy’s fleet; attack enemy trade; block the enemy’s coast and conduct raids on the enemy’s ports, coastal towns and colonies; seize, when possible, the enemy’s colonies; subsidize allies on the Continent; wait for the attacks on the enemy’s economy and peripheral areas to erode its capacity to resist; exploit opportunities through the use of surprise made possible by the superior mobility of the fleet; deploy limited expeditionary forces on the Continent to fight alongside the larger forces of the allies; and finally, to manoeuvre the enemy into an untenable position in which it had no other option but to conclude a peace agreement on terms set by the British and their allies.[8]

The abovementioned signals what a large and competent navy is able to achieve and it is pertinent to reintroduce the Port of Darwin as a strategic necessity to an expanding country—in this case the People’s Republic of China (PRC). This stated it is important to observe how other countries have exercised their naval power in more recent times to show that the use of this power-base has not lost its appeal to governments. The British accomplished this through variations of force that are stipulated in the abovementioned, and the US certainly has used its navy on many occasions to enforce its geo-political will, or by directly responding to perceived threats to US ‘interests,’ and/or to force countries to abandon their anti-US stance. Engaging its sea-power by moving into the Strait of Hormuz in 1987 and reflagging Kuwaiti tankers to the US, so as to legally allow these ships to be protected by the US Navy[9] is one example of the utilization of direct force through the prism of protecting US domestic interests—in this case the flow of oil via tankers to the US. Iceland using its ships to disrupt British fishing on their actual/perceived territorial waters—in the ‘cod wars’ of 1950s through to the 1970s—is another example of the exercising of direct influence through the use of sea-power[10]. History is littered with examples of sea-power and the subsequent force-on-force collisions that have been engaged in are too numerous to mention. Notwithstanding, to assume that the People’s Liberation Army Navy (PLAN) will not move in the direction of using forceful and direct power is folly in the extreme. More to the point, if the NT government does not know this, the Liberal Party of Australia certainly does. To give this statement some meaning is to construct several scenarios.

As stipulated, China is on the rise and is establishing geo-strategic foothold in the A-P region, although it is also expanding into Central Asia. With this in mind is to also understand that the PRC is acquiring assets as it progresses and it correctly deems these assets—in line with international laws and protocols—as ones of legal ownership. With ownership and short of a nation-state nationalising their assets a country is entitled to protect said assets, or bestow that right on another nation-state to be a byproxy guardian. The Australia-New Zealand-United States (ANZUS) treaty would allow Australia for instance to act on behalf of, and with the support of the US, in an area of friction. The legalities of this is not important to the debate as this is not a legal submission, and what matters in this instance is a country can act alone, or ask another to protect its assets.

The activities of the PRC’s military has recently been exercising its actual/perceived rights in the South China Sea[11] with the construction of airstrips and bases on several atolls and this standpoint, regardless of the objections of others, remains the (historical) strategic necessity for a country expanding through force-projection. This, in and of itself, should have sent warning signals to the NT government but for some reason it did not. Now to the Port of Darwin. If for any reason the PRC government believed that Chinese interests were under threat it could (and would) order the PLAN to exercise an incursion into the port, and moreover, it could claim any action was necessary under the auspices of protecting its quasi- cum literal-territorial assets; and of protecting a Chinese direct-investment. To continue, what if the Australian government has a strategic disagreement with the PRC? For instance the Australian government objecting to the PLAN presence in the aforementioned atolls. What if the disagreement escalates? China would be entitled to protect its assets with a physical presence—as the British did with Hong Kong on numerous occasions. The PLAN could blockade the port, or harass ships that exited the harbour without the PLANs express approval. China could refuse access to Australia’s allies and/or harass ships of Australia’s allies whilst in ‘its territory’ harbour and moreover, China could argue this was needed to protect its international assets. Compounding these issues for Australia is the somewhat mythical belief that the US would come to Australia’s protection. This is due to the US being Australia’s greatest ally isn’t it? Once again, the Australia-US relationship is not static and is influenced by both domestic and international politics. What if the US moves toward ‘Wilsonian-isolationism,’[12] if Trump become the next US president? What if Clinton directs America’s interests more toward Central Asia and decides the A-P is claiming too much of the US’ security assets time and effort for little reward? What is this phenomenon? Fraser Nelson stipulated in The Spectator recently that ‘America First’ is gaining momentum. Simply put: ‘It means using the [US] military when directly threatened, but [the US] worrying a lot less if other countries are attacked’[13]. What if China demands Australia sides with it rather than Japan, in the disputed territorial islands referred to, and/or demands that US Marine rotation stop? And furthermore, states Australia must choose or have Australian Navy access to the port limited/cancelled? If the PLAN decided to place one of its aircraft carriers in the port as a sign of force-projection, would Australia be able to say no? All of these examples however, are insignificant if the PLAN decides to place several of its cruise-missile carrying submarines[14] in the port—this is where the real potential for ‘brinkmanship’[15]; and power-projection really comes into play. The scenarios are limitless and need not be expanded further.

To be sure, Australia would have to deal with any PLAN activity within the port on its own and each one on its merits. However, to have such a naked example of business interests overriding security interests—especially when China is rising so rapidly, and the US is in such rapid decline in terms of applying its assets to other nation-states needs/interests—is simply astounding. Australia will rue the day it allowed this to happen and whether the US would ever come to the aid of Australia is, and always has been a moot point, and a cursory glance at World War Two history will attest to this state-of-affairs. Notwithstanding, the core element of the debate to actually lease such a valuable asset to a country—in this case China—at a time of such oncoming (and what will be ongoing) frictions is a signal that the Australian government is fundamentally not concerned with Australia’s security interests beyond the rhetoric of ‘stopping the boats.’ For Malcolm Turnbull to state “The security issues relating to that port sale were thoroughly investigated in Australia’s national interest by the relevant security agencies. That’s how we determine security issues; not, with all due respect, by text message opinion polls,” [16] simply offers up that business interests are the ultimate expression of a secure nation.

The Port of Darwin should not have been leased to any company and should have remained as a NT government asset, through the tutelage of the Australian government within a single understanding: it is vital to the security of Australia. No amount of money should have been traded for the right of, and for, another sovereign nation-state, whether as a byproxy of a particular government, or as a stand-alone independent company that operates within the prism of its government’s rationales. Notwithstanding, what the lease of the Port of Darwin means for Australians is the NT government has sacrificed the security of all Australians to an extent that is unheard of in recent times. The lease of Hong Kong was a ‘thorn in the side’ of an increasingly independent China, and China vowed to take it back—through diplomacy or force if need be—and have true independence in their post-1949 era. Australia should have learned from China in order to understand what true independence actually comprises. China will utlilize this asset to its maximum potential, and Australia will be left wanting if the PRC makes unforeseen demands on Australia—the ones which the security agencies should have taken into account—and more to the point, the NT government should be ashamed of its ‘business management model’ because all Australians will eventually have to accept their folly; and the Turnbull government by allowing this to happen, has essentially placed Australia in an extremely dangerous future predicament. Australia will have to tread very warily in the A-P region per se in the coming years, however to have given the PRC through their military—the PLAN—such a strategic vantage point is stupidity writ large on the part of Australia; and the NT government in particular.

©Strobe Driver. June 2016.

[1] ‘Will the controversial decision to lease the port of Darwin to a Chinese company have an impact on the federal election?’ Reporter: Jason Om. Presenter: Tony Jones. Australian Broadcasting Corporation, Lateline, 1 June, 2016. http://www.abc.net.au/lateline/content/2015/s4473850.htm

[2] ‘Will the controversial decision to lease the port of Darwin to a Chinese company have an impact on the federal election?’ http://www.abc.net.au/lateline/content/2015/s4473850.htm

[3] http://www.abc.net.au/lateline/content/2015/s4473850.htm

[4] Fareed Zakaria. ‘Mishandling the China Challenge.’ South China Post, 9 Aug, 2005.

[5] ‘The Bretton Woods exchange-rate system saw all currencies linked to the [US] dollar, and the dollar linked to gold.’ Whilst this was eventually abandoned by the Nixon administration it set in play the continual attachment of countries to the US dollar. See: ‘What was decided at the Bretton Woods summit. The Economist. 30 June, 2014. http://www.economist.com/blogs/economist-explains/2014/06/economist-explains-20

[6] ‘Interview: Adam Giles, NT Chief Minister.’ Reporter: Tony Joes. Australian Broadcasting Corporation. Laterline, 1 June, 2016. http://www.abc.net.au/lateline/content/2015/s4473856.htm

[7] See: ‘United Arab Emirates Facilities.’ GlobalSecurity.org http://www.globalsecurity.org/military/facility/uae.htm

[8] Adrian Lewis. Omaha Beach: A Flawed Victory. Chapel Hill: The University of North Carolina Press, 2001, 34-35. Emphasis added.

[9] See: ‘Tanker War.’ The Robert S. Strauss Center for Securit and Law. https://www.strausscenter.org/hormuz/tanker-war.html

[10] Valur Ingimundarson. ‘Fighting the Cod Wars in the Cold War: Iceland’s challenge to the Western Alliance in the 1970s., The RUSI Journal, 148:3, 88-94. http://www.tandfonline.com/doi/pdf/10.1080/03071840308446895

[11] See: South China Sea: Conflicting Claims and Tensions.’ The Lowy Institute. http://www.lowyinstitute.org/issues/south-china-sea The Lowy Institute observes: ‘While UNCLOS [The United Nations Convention of the Law of the Sea] has been signed and ratified by nearly all the coastal countries in the South China Sea, its interpretation is still hotly disputed. Moreover, legal and territorial disputes persist, primarily over the Spratly and Paracel Islands as well as Scarborough Shoal, the scene of ongoing tensions between China and the Philippines. In terms of the Spratlys, more than 60 geographic features are reportedly occupied by claimants, which consist of Taiwan, Vietnam, the Philippines, China and Malaysia. The Paracel Islands are the subject of overlapping claims by China, Vietnam and Taiwan. China makes the largest claim in the South China Sea, within a ‘dash-line’ map published by the Kuomintang Government in 1947. The ambiguous nine or ten ‘dash line’, which China asserts is based on evidence of historical usage, is disputed by other South China Sea territorial claimants and lacks a legal foundation under UNCLOS.’

[12] See: ‘American Isolationism in the 1930s,’ United States Department of State, Office of the Historian. https://history.state.gov/milestones/1937-1945/american-isolationism

[13] Fraser Neson. ‘US ready to go it alone.’ The Spectator/The Age. Fairfax Media: Melbourne, 7 June, 2016, 18.

[14] [14] For an insight into the capabilities of the PLAN see: Franz Stefan-Gady. ‘Chinese Submarine Simulates Cruise Missile Attack on US Aircraft Carrier.’ 21 Dec, 2015. http://thediplomat.com/2015/12/chinese-submarine-simulates-cruise-missile-attack-on-us-aircraft-carrier/

[15] According to Gochman brinkmanship becomes part of political manoeuvrings when, ‘decision makers perceive a dramatic impending shift in the balance of power in favour of an adversary and/or a substantial internal challenge to their own political position at home.’ See: The Process Of War. Advancing the Scientific Study of War. Edited by Stuart Bremer and Thomas Cusack. Australia: Gordon and Breach, 1995.

The Process of War, 97.

[15] For an insight into the capabilities of the PLAN see: Franz Stefan-Gady. ‘Chinese Submarine Simulates Cruise Missile Attack on US Aircraft Carrier.’ 21 Dec, 2015. http://thediplomat.com/2015/12/chinese-submarine-simulates-cruise-missile-attack-on-us-aircraft-carrier/

[16] Jared Owens. ‘China Darwin port: Intelligence, not texts’ sealed deal, says Turnbull.’ The Australian. 9 Mar, 2016. http://www.theaustralian.com.au/national-affairs/defence/china-darwin-port-intelligence-not-texts-sealed-deal-says-turnbull/news-story/8511b081548e2e1948b28766a8bdbe42

This article was originally published on Geo-Strategic Orbit.

Strobe Driver completed his doctoral thesis on war studies in 2011. Since then he has written on Asia-Pacific security, war, terrorism and international politics as well as Australian domestic politics. Dr Driver is a sessional lecturer and tutor at Federation University, Ballarat, Victoria. The views expressed here are his own.

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11 comments

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  1. mark delmege

    China of course isn’t the only foreign power running port facilities in Australia and nor is it the only country to build military bases on atolls. Diego Garcia is a place where the local people were kicked out and if you google earth that area of the ocean just to the north google has blocked out parts of the ocean – which suggests to me more and secret military bases.

  2. Peeved off

    Extremely dangerous. What the hell does this government of Australia thinking? May as well just tell them to come in and take us over! God is this country going to be in deep shit soon!

  3. John

    No strategic infrastructure should have been privatised. That includes ports, airports, roads, rail, water, power and telecommunications. Losing our sovereignty over these assets to foreign ‘investors’ is bound to cause problems.

  4. Phil

    Fascinating analysis from Strobe – thanks.

    Seems there is not one area of national governance that the Liberals have not seriously screwed up in. I’m astounded at the polls – they suggest that perhaps half of the Australian population is happily and blissfully ignorant of the politics that determine and ultimately rule their daily lives.

    In three short years Australia has slid backwards on every measure worth measuring and yet still the polls refuse to reflect our worsening fiscal, social and environmental circumstances.

  5. nexusxyz

    The last paragraph sums up the preferred and logical position for Australia. This should apply to all strategic infrastructure. Also no other country should be able to gain rights to Australian land. They can lease but not own.

  6. jimhaz

    [They can lease but not own]

    And no leases over 20 years, whether OS or OZ owned, regardless of the infrastructure investment that may be needed.

  7. Geoff Andrews

    We can only hope that this deal will not, in future, be judged to be treasonous.
    I can see the excuses trotted out when the shit hits the fan …. you know, “commercial-in-confidence”, “balancing the budget”, “thought it was a good idea at the time”, “under the terms of the FTA with China…..”, “it was Labors fault”
    But, gee, a one percent commission on the deal would top up one’s superannuation nicely, wouldn’t it! (:-)

  8. mark delmege

    What an alarmist rubbish article. Suggesting China would protect the lease of this tiny port with military aggression is just outrageous. Comparing the Port of Darwin with Hong Kong is just childish dribble. Get a grip.

  9. Peeved off

    No Mark delmege. I wouldn’t trust any stinking Asian country. Especially China. Giving them access to this wonderful country is courting peril and this bloody government, will do, say,sell anything for a quick buck!

  10. etnorb

    What an excellent article Dr Driver! To think that it could be at all possible for a foreign country–in this case Communist China–to be “allowed” ANY virtually “free access” to something as vital an asset & (security-wise) very important to Australia, as the Port of Darwin, is sheer bloody madness! There is absolutely NO way would Australia–or for that matter any Country–be “allowed” to even think about or participate in leasing, renting, buying, etc, ANY “strategically important” building, land, port, or “anything” in China! And not only has this inept lying Liberal mob “enabled” our (possibly) most vital security asset as the Port of Darwin, they are also thinking of “allowing” the Port of Melbourne (or parts of it!) to be leased or sold to the Chinese as well! And some people wonder why a lot of us were so alarmed when the huge S.Kidman Pastoral areas were being “offered” to the Chinese! I am NOT against selling of (some) assets to foreign nations, but I, personally draw the line with allowing any Communist or Dictatorship country into Australia, to “give” them any of our land, buildings, ports or anything! Fair “shake of the sauce bottle”–to paraphrase that KRudd bloke! I do not think this article was in any way “alarmist or rubbish”–alarmist maybe, but if only to point out the absolute idiocy of our Federal Government in allowing this Darwin Ports “business” to EVER happen!

  11. mark delmege

    etnorb here every thing is for sale – every major industry every major company and most smaller ones on the stock exchange have major or minor foreign ownership. If you think about the dribble of Strobe long enough you will see clearly how empty is his argument. China taking over the port in a conflict over anything would be fantastically foolish. All it is – is a loading unloading facility. Neither a big one or the only shipping facility in Darwin. And you can expect others to be built in the next 50 years – at least. What makes a port facility useful are the roads and rail and produce – oh yeah don’t forget the ships either.
    But at least the article has shown up some home grown racists/chauvinists and empty headed bigotry.

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