As I have written here before, the change in the policy landscape since the release of the 2016 White Paper has been nothing short of remarkable. Policies that are backed up by action and dollars rather than rhetoric has been a refreshing change for Defence and Industry.
However, the plan in this policy landscape that I have found most challenging has been the drive to become a top 10 exporter within a decade. Based on the international standard from the Stockholm International Peace Research Institute (SIPRI), Australia is currently sitting at 19th in terms of exports but sixth for imports of military technology. In short, we’re pretty good at Foreign Military Sales via the US. Whilst this is not necessarily a bad thing, it does not expand our presence in a neighbourhood of nations outside our social or economical comfort zone (in order – India, South Korea, Pakistan, China and Singapore).
According to latest 2017 figures from SIPRI, the US continued to dominate major arms exports, accounting for 33 per cent of all major arms exports and supplying arms to 103 recipients in 2012–16. Russia was the world’s second largest exporter, accounting for 23 per cent of all major arms exports. It supplied arms to 51 recipients in 2012–16 with 70 per cent of its exports going to four countries: India, Vietnam, China and Algeria.
China was the world’s third largest exporter of major weapons in 2012–16, having just overtaken Germany, France and the UK, all countries with higher exports during 2007–11. Chinese exports went up by 74 per cent in 2012–16 compared to 2007–11, while French and German exports decreased by five per cent and 36 per cent respectively. British exports increased by 27 per cent.
Perhaps the more alarming trend that the SIPRI figures show is the arms build up in our region. The South China Sea has been the subject of increasingly bold rhetoric from the Chinese and US governments. Territorial disputes involve various states but have been particularly heated between China, the Philippines, and Vietnam. SIPRI data shows that both the Philippines and Vietnam have made large increases in arms imports, particularly of maritime weaponry. The Philippines increased arms imports by 426 per cent between 2012–16 compared to 2007–11 and Vietnam increased arms imports by 202 per cent over the same period.
Similar figures emerge from other regional states. Taiwan increased arms imports by 647 per cent and Indonesia increased arms imports by 70 per cent. Singaporean imports decreased by 47 per cent, but it is still absorbing major acquisitions from 2007–11. Malaysia’s arms imports dropped after major procurement programs finished in 2007–11.
I highly recommend the SIPRI website for its interactive graphs and tables that make the numbers accessible in different formats, acknowledging that the figures have some issues in terms of reliability but the best we have available. However you choose to view them, one thing is clear; the link between hard and soft power here is hard to deny, and the competition in this space for sales and influence cannot be understated.
At the moment, our top three export destinations are logical nations; 52 per cent to the US, 21 per cent to Indonesia, and five per cent to Singapore. But these markets will have to diversify and expand if we are to meet the top 10 exporter goal.
The complimentary agencies within Defence coordinating this policy drive are set to receive more support thanks to a ministerial push. The Defence Export Control Office (DECO) works with companies to make sure they fulfil all the legislative requirements to export products, with dual-use items the most contentious. The Defence Export Office, with the support of the Defence Export Advocate in former Defence Minister David Johnston, is essentially the sales office and front of the Australian Military Sales Catalogue (now in its second iteration). These three agencies are the face of the push to get exports and the global Defence attaché network on the fast track.
At the moment, that is where this campaign falls down. Nothing sells a capability like a happy home market reference customer. I would argue that despite the directive, many Defence attachés are not yet comfortable to be the face of such an effort. Perhaps that is a matter of time.
Australia has had some notable successes in the export realm but they are the exception rather than the rule. Only the BAE Systems Nulka decoy and EOS remote weapons stations have exceeded the $1 billion export mark. Both are high technology offerings in a niche capability. These are the spaces in which Australia needs to focus in order to be competitive.
This article first appeared in the October 2018 edition of ADM.