America no longer enjoys military primacy in the Indo-Pacific and its capacity to uphold a favourable balance of power is increasingly uncertain.
- The combined effect of ongoing wars in the Middle East, budget austerity, underinvestment in advanced military capabilities and the scale of America’s liberal order-building agenda has left the US armed forces ill-prepared for great power competition in the Indo-Pacific.
- America’s 2018 National Defense Strategy aims to address this crisis of strategic insolvency by tasking the Joint Force to prepare for one great power war, rather than multiple smaller conflicts, and urging the military to prioritise requirements for deterrence vis-à-vis China.
- Chinese counter-intervention systems have undermined America’s ability to project power into the Indo-Pacific, raising the risk that China could use limited force to achieve a fait accompli victory before America can respond; and challenging US security guarantees in the process.
- For America, denying this kind of aggression places a premium on advanced military assets, enhanced posture arrangements, new operational concepts and other costly changes.
- While the Pentagon is trying to focus on these challenges, an outdated superpower mindset in the foreign policy establishment is likely to limit Washington’s ability to scale back other global commitments or make the strategic trade-offs required to succeed in the Indo-Pacific.
Over the next decade, the US defence budget is unlikely to meet the needs of the National Defense Strategy owing to a combination of political, fiscal and internal pressures.
- The US defence budget has been subjected to nearly a decade of delayed and unpredictable funding. Repeated failures by Congress to pass regular and sustained budgets has hindered the Pentagon’s ability to effectively allocate resources and plan over the long term.
- Growing partisanship and ideological polarisation — within and between both major parties in Congress — will make consensus on federal spending priorities hard to achieve. Lawmakers are likely to continue reaching political compromises over America’s national defence at the expense of its strategic objectives.
- America faces growing deficits and rising levels of public debt; and political action to rectify these challenges has so far been sluggish. If current trends persist, a shrinking portion of the federal budget will be available for defence, constraining budget top lines into the future.
- Above-inflation growth in key accounts within the defence budget — such as operations and maintenance — will leave the Pentagon with fewer resources to grow the military and acquire new weapons systems. Every year it becomes more expensive to maintain the same sized military.
America has an atrophying force that is not sufficiently ready, equipped or postured for great power competition in the Indo-Pacific — a challenge it is working hard to address.
- Twenty years of near-continuous combat and budget instability has eroded the readiness of key elements in the US Air Force, Navy, Army and Marine Corps. Military accidents have risen, aging equipment is being used beyond its lifespan and training has been cut.
- Some readiness levels across the Joint Force are improving, but structural challenges remain. Military platforms built in the 1980s are becoming harder and more costly to maintain; while many systems designed for great power conflict were curtailed in the 2000s to make way for the force requirements of Middle Eastern wars — leading to stretched capacity and overuse.
- The military is beginning to field and experiment with next-generation capabilities. But the deferment or cancellation of new weapons programs over the last few decades has created a backlog of simultaneous modernisation priorities that will likely outstrip budget capacity.
- Many US and allied operating bases in the Indo-Pacific are exposed to possible Chinese missile attack and lack hardened infrastructure. Forward deployed munitions and supplies are not set to wartime requirements and, concerningly, America’s logistics capability has steeply declined.
- New operational concepts and novel capabilities are being tested in the Indo-Pacific with an eye towards denying and blunting Chinese aggression. Some services, like the Marine Corps, plan extensive reforms away from counterinsurgency and towards sea control and denial.
A strategy of collective defence is fast becoming necessary as a way of offsetting shortfalls in America’s regional military power and holding the line against rising Chinese strength. To advance this approach, Australia should:
- Pursue capability aggregation and collective deterrence with capable regional allies and partners, including the United States and Japan.
- Reform US-Australia alliance coordination mechanisms to focus on strengthening regional deterrence objectives.
- Rebalance Australian defence resources from the Middle East to the Indo-Pacific.
- Establish new, and expand existing, high-end military exercises with allies and partners to develop and demonstrate new operational concepts for Indo-Pacific contingencies.
- Acquire robust land-based strike and denial capabilities.
- Improve regional posture, infrastructure and networked logistics, including in northern Australia.
- Increase stockpiles and create sovereign capabilities in the storage and production of precision munitions, fuel and other materiel necessary for sustained high-end conflict.
- Establish an Indo-Pacific Security Workshop to drive US-allied joint operational concept development.
- Advance joint experimental research and development projects aimed at improving the cost-capability curve.
America’s defence strategy in the Indo-Pacific is in the throes of an unprecedented crisis. It is, at its core, a crisis born of the misalignment between Washington’s strategic ends and its available means. Faced with an increasingly contested regional security landscape and with limited defence resources at its disposal, the United States military is no longer assured of its ability to single-handedly uphold a favourable balance of power in the Indo-Pacific. China, by contrast, is growing ever more capable of challenging the regional order by force as a result of its large-scale investment in advanced military systems. Although the past 18 months have seen renewed efforts by the US Department of Defense to prioritise the requirements for great power competition with China — a key objective of America’s 2018 National Defense Strategy (NDS) — Washington has so far been unable or unwilling to sufficiently focus its armed forces on this task or deliver a defence spending plan that fits the scope of its global strategy. The result is an increasingly worrying mismatch between US strategy and resources that jeopardises the future stability of the Indo-Pacific region.
The drivers of this crisis are multi-faceted and likely to persist. At the strategic level, Washington’s commitment to an expansive liberal-order building agenda — including nearly two decades of counterinsurgency wars in the Middle East — has dangerously overstretched its defence resources. This has left the US armed forces ill-prepared for the kind of high-intensity deterrence and warfighting tasks that would characterise a confrontation with China. While the Pentagon is trying to refocus on preparations for future great power wars, an outdated superpower mindset within Washington’s foreign policy establishment continues to limit America’s ability to scale back its other global commitments or make the hard strategic and military trade-offs required to prioritise the Indo-Pacific.
This problem is being compounded by developments in the regional military balance. Having studied the American way of war — premised on power projection and all-domain military dominance — China has deployed a formidable array of precision missiles and other counter-intervention systems to undercut America’s military primacy. By making it difficult for US forces to operate within range of these weapons, Beijing could quickly use limited force to achieve a fait accompli victory — particularly around Taiwan, the Japanese archipelago or maritime Southeast Asia — before America can respond, sowing doubt about Washington’s security guarantees in the process. This has obliged the Pentagon to focus on rebuilding the conventional military capabilities required to deny Chinese aggression in the first place, placing a premium on sophisticated air and maritime assets, survivable logistics and communications, new stocks of munitions and other costly changes.
At the domestic political level, meanwhile, Congress has struggled to deliver annual defence budgets commensurate with the ever-expanding demands of America’s global strategy. The impact of the Budget Control Act’s legislative caps on defence spending over the past decade, coupled with repeated funding delays and budgetary uncertainty, has hobbled America’s ability to effectively respond to a deteriorating strategic landscape in the Indo-Pacific. Growing polarisation between Republicans and Democrats over national spending priorities, coupled with looming fiscal challenges, is likely to impede the political consensus required to achieve sufficient real growth in defence expenditure to implement the National Defense Strategy. At the same time, above-inflation growth in key accounts within the defence budget will leave the Pentagon with fewer resources to grow the military and acquire new weapons systems.
All of this has resulted in an atrophying force that is not sufficiently ready, equipped or postured to fulfil a strategy of conventional deterrence by denial in the Indo-Pacific. Indeed, the combination of two decades of near-continuous combat operations, budget dysfunction, aging equipment, and the rising cost of advanced military hardware has severely impacted the quality and quantity of America’s high-end armed forces. This has produced an accumulation of readiness problems and deferred modernisation priorities that must now be simultaneously addressed, placing additional strain on a defence budget that has only recently started to recover from a long period of austerity. While America’s military services have started to implement much-needed changes to their capabilities, posture and operational concepts to bolster conventional deterrence vis-à-vis China, it is far from clear that the Pentagon will have the budgetary capacity or strategic focus to deliver these in a robust and timely way.
This is not to say that America is becoming a paper tiger. Washington still presides over the world’s largest and most sophisticated armed forces; and is likely to continue to supply the central elements of any military counterweight to China in the Indo-Pacific. But it does mean that the United States’ longstanding ability to uphold a favourable regional balance of power by itself faces mounting and ultimately insurmountable challenges.
Australia should be deeply concerned about the state of America’s armed forces and strategic predicament in the Indo-Pacific. In order to realise shared defence objectives in the face of these challenges, Canberra would be wise to increase security cooperation with Washington and other like-minded partners to advance a strategy of collective regional defence. Such a strategy would see capable middle powers — like Australia and Japan — aggregate defence capabilities to offset shortfalls in America’s regional military power and hold the line against Chinese adventurism. This kind of collective action is not without risks and must be conducted prudently, including by remaining ever vigilant about America’s capacity and willingness to underwrite a regional balancing coalition. But as Australia’s freedom of action and ability to evade military coercion ultimately depend on the preservation of a stable strategic order, contributing to collective deterrence in the Indo-Pacific is the best way for Canberra to assist in averting a deeper crisis.
Part 1: Strategic challenges and overstretch
America’s military primacy in the Indo-Pacific is over and its capacity to maintain a favourable balance of power is increasingly uncertain. This is the stark reality facing US defence strategy today. After nearly two decades of costly distraction in the Middle East, the United States is struggling to meet the demands of great power competition with China and faces the uncomfortable truth that its armed forces are ill-prepared to succeed.
The stakes could not be higher. Since the early 1950s, America’s position in the Indo-Pacific has rested on its ability to defeat aggression, protect a network of allies and preserve a strategic order in which no single nation dominates. But this foundation of stability is now under strain. China’s military is increasingly powerful, while America’s warfighting edge has dangerously eroded. Many now warn that the United States might fail to deter — or could even lose — a limited war with China, with devastating consequences for the region’s future strategic landscape.
Alert to these risks, the US Department of Defense is taking steps to retool the armed forces for high-end warfare and focus greater resources on the Indo-Pacific. Its core aim is to bolster the balance of power by developing new ways for the United States and its regional allies and partners to deter Chinese adventurism with conventional armed forces, even in the absence of America’s traditional all-domain military dominance. The stability of the broader regional order hinges on the success of this denial strategy.
Meeting this challenge, however, requires hard strategic choices which the United States may be unwilling or unable to make. In an era of constrained budgets and multiplying geopolitical flashpoints, prioritising great power competition with China means America’s armed forces must scale back other global responsibilities. A growing number of defence planners understand this trade-off. But political leaders and much of the foreign policy establishment remain wedded to a superpower mindset that regards America’s role in the world as defending an expansive liberal order. This mindset, if it persists, will continue to overstretch defence resources, increase future warfighting risks, and prevent the robust implementation of US military strategy in the Indo-Pacific.
American primacy and the crisis of strategic insolvency
For more than 70 years, the United States has worked to maintain its pre-eminent global position by upholding favourable balances of power in the world’s most strategically significant regions — Europe, the Indo-Pacific and the Middle East. This, at its core, has been a military enterprise.1 Although trade, diplomacy and soft power have all played key roles, America’s unrivalled capacity to project combat power abroad and outmatch its adversaries has been the ultimate guarantor of a strategic order based on the continuous pursuit of military primacy. American power has deterred and defeated military aggression by aspiring regional hegemons. It has enabled the United States to sustain a vast network of allies and partners that further enhances its strength and global reach. And, following the collapse of the Soviet Union and America’s “unipolar moment”, it has facilitated Washington’s pursuit of an ambitious liberal order-building agenda targeting rogue states, combating terrorists and policing a long list of other global dangers.2
America’s armed forces have underpinned the Indo-Pacific balance of power for much of this period. Ever since the Second World War, Washington’s “defensive perimeter” in the Western Pacific — stretching along what is now known as the First Island Chain, from Japan and the Ryukyu Islands archipelago down to Taiwan and the Philippines — served as a check on the rise of Soviet and Chinese power.3 Its five treaty alliances in the region — with Japan, South Korea, the Philippines, Thailand and Australia — along with its defence assurances over Taiwan have mostly provided for deterrence and mutual restraint between China and its neighbours. In terms of force posture, large-scale defence facilities in Hawaii, Guam and Diego Garcia, and forward operating bases in Japan, South Korea, Australia and Singapore, as well as access points in several Pacific Islands nations, have enabled Washington to sustain a robust military presence across this vast maritime region. Crucially, America’s ability to guarantee the security of regional allies and partners has served as the quid pro quo for uncontested US primacy and provided the geopolitical basis for its power projection into the region. Although there have been limits to what US power could achieve, especially during the Vietnam War and on the Korean Peninsula, America’s uncontested primacy in the Indo-Pacific has deterred major power aggression, maintained regional stability and safeguarded freedom of access to international waters and airspace.
Today, none of this can be taken for granted. According to a growing number of leading voices in the US national security community, Washington is facing a crisis of “strategic insolvency” in which the ends of its global strategy now outstrip its means.4This judgement is premised on a bleak assessment of the current state of the US armed forces. As the congressionally mandated National Defense Strategy Commission puts it: “America’s military superiority — the hard-power backbone of its global influence and national security — has eroded to a dangerous degree” making it possible that Washington “could lose the next state-versus-state war it fights”.5 Analysts at the RAND Corporation have reached similar conclusions, arguing that the military is “failing to keep pace with the modernizing forces of great power adversaries, poorly postured to meet key challenges in Europe and East Asia, and insufficiently trained and ready” for major war.6 In short, America’s Joint Force — the combined strength of its five military services — no longer has the resources, force structure, technological edge or operational concepts to fully achieve its global commitments. Its capacity to uphold favourable regional balances of power by deterring great power challengers is increasingly in doubt.
At least four inter-related factors have produced this dangerous mismatch between America’s capabilities and top strategic objectives. Most, alarmingly, are self-inflicted wounds caused by years of unstrategic behaviour by both sides of the political spectrum.
First, nearly two-decades of war in the Middle East has taken a serious toll on the Joint Force, wearing out large parts of the military and leaving it ill-prepared for great power competition. Military readiness — or, the armed forces’ preparedness for combat — has been a particularly grave problem. Owing to the high operational tempo of counterinsurgencies in Afghanistan, Iraq and Syria, in addition to the military’s other global commitments, overall readiness fell to dangerous levels as the services struggled to meet unsustainable demands for overseas deployments, maintenance and training.7 By 2017 this situation had become a crisis: Only a third of the Army’s brigade combat teams were prepared for deployment, less than half the Air Force was ready for a high-end fight against a peer adversary, the Navy was facing a self-described “readiness hole”, and 53 per cent of Naval and Marine Corp aircraft were deemed “unfit to fly”.8 Although these numbers have started to recover, their corrosive effects on the Joint Force will take time and resources to repair. As then-Chairman of the Joint Chiefs of Staff General Joseph Dunford noted in March 2019, the military “cannot undo decades of degradation in just a few years”.9
Second, while the United States was demanding ever more from its armed forces, it was simultaneously reducing its expenditure on defence and thereby compounding the strain on an already overstretched military. The root of this problem was political dysfunction within Congress.10 Following the Budget Control Act of 2011 — a congressional mechanism designed to reign in the federal deficit — real national defence spending fell from its FY2010 peak of US$798.6 billion to just US$613.3 billion in FY2017.11 This amounted to a US$550 billion loss in net buying power between 2012 and 2017.12 Making matters worse, as annual defence budgets became unpredictable in size and were not passed on time, the Pentagon was hindered in its ability to allocate resources efficiently and in a strategic way. The impact of all this exacerbated the military’s readiness crisis and was devastating for the overall size of the force. As a result, by 2016 the Army, Navy and Air Force were either at or approaching their lowest end-strength numbers since the Second World War.13
Third, the combined effect of a constrained fiscal environment and the unrelenting tempo of conflict in the Middle East has compelled the armed forces to underinvest in preparations for great power competition.14 This is a case of the urgent crowding out the important.15 Over the past two decades, critical military modernisation priorities — from the procurement of fifth generation fighters and investment in advanced technologies, to the recapitalisation of America’s nuclear triad — have been deferred or slowed by the overall squeeze on resources.16 The consequences of this failure to modernise have been dire. Not only has it contributed to the erosion of America’s technological superiority vis-à-vis peer competitors, but it has left the military with an increasingly outdated force that may be “irrelevant” for the kind of highly-contested scenarios that will characterise future wars.17 In General Dunford’s words: “Seventeen years of continuous combat and fiscal instability have affected our readiness and eroded our competitive advantage”.18 The same is true of the way that personnel training has also prioritised the near-term demands of counterinsurgency ahead of more strategically important mission sets. As Jon Kyl and Roger Zakheim, formerly with the House Armed Services Committee, have warned: The military’s sustained focus on the Middle East has created “a generation of war fighters that is ill-equipped and untrained for a conventional fight with ‘great powers’”.19
Finally, the global scope of America’s liberal order-building strategy has distracted the Pentagon from focusing on the most serious threats to US primacy: The return of China and Russia as militarily advanced great powers. This, in many ways, is the underlying driver of strategic insolvency today. Since the end of the Cold War, the expansion of American security commitments to a total of 69 countries, along with Washington’s overly ambitious democracy promotion agenda, has set the United States on an unsustainable strategic trajectory.20 Although this liberal order project appeared feasible in the 1990s, it became prohibitively expensive as the costs of military interventions from the Balkans to the Middle East stacked up, and as the diffusion of sophisticated defence technology saw more and more adversaries acquire potent counter-intervention capabilities.21
America’s capacity to enforce its vast liberal order has also correspondingly declined. Whereas the United States and its allies accounted for 80 per cent of world defence spending in 1995, today their share has fallen to just 52 per cent — leaving them less well-equipped to address an ever growing line-up of international challenges.22 As Harvard University academic Stephen Walt observes of US strategy during this period: “The available resources had shrunk, the number of opponents had grown, and still America’s global agenda kept expanding”.23 The consequences of this overstretch are now coming home to roost. Not only have the direct costs of liberal order-building been astronomical — by some estimates, the Department of Defense has spent over US$1.8 trillion on the global war on terror since 11 September 2001 for little strategic payoff — but the worldwide diffusion of American resources and attention has left the military underprepared for the return of great power competition.24 This is what the Pentagon is now working to address.
Figure 1: The scale of America’s global military presence and counterterrorism activities
Amplifying the Trump administration’s 2017 National Security Strategy, the NDScontends that China is leveraging its military modernisation as part of an “all-of-nation” strategy to obtain “Indo-Pacific regional hegemony in the near-term and displacement of the United States to achieve global pre-eminence in the future”.31This bleak assessment of Beijing’s intentions — coupled with the fact that China may have, or could soon develop, the military and economic capabilities to realise these aims — explains why the Pentagon’s strategy team elevated the deterrence of China to the top tier of America’s strategic priorities.32 China is the US military’s “pacing threat” for high-intensity combat, whereas Russia — with the exception of its nuclear arsenal — poses a somewhat less formidable challenge and is predominantly a veto player in its own region.33 It follows that ensuring a favourable balance of power in the Indo-Pacific to check possible Chinese aggression is of the upmost importance to US strategy. While the NDS does not rank geographic priorities, the Department of Defense’s Indo-Pacific Strategy Report of June 2019 formally identifies the Indo-Pacific as America’s “priority theatre”.34 This clarity of focus is an important step-change in Washington’s declaratory policy.
Figure 2: Key elements of China’s military modernisation
Since the mid-1990s, China has rapidly transformed its military from an antiquated Soviet-era institution into a sophisticated fighting force that is optimised to challenge American power projection assets. This has occurred on the back of stellar economic growth. Chinese defence spending rose by approximately 900 per cent between 1996 and 2018, permitting the People’s Liberation Army (PLA) to sustain an impressive tempo of military modernisation across most key capability areas.48 Its advances in missiles, fighter jets, attack submarines and surface ships have been particularly striking in qualitative and quantitative terms. Although the PLA has yet to catch-up with the US military, Eric Heginbotham and other leading defence analysts point out that “the trendlines are moving against the United States across a broad spectrum of mission areas”.49 More to the point, because China would enjoy a home-court advantage in the case of a regional conflict, “it does not need to catch up to the United States to dominate its immediate periphery”.50
Figure 3: China’s missile inventory, 2004-2019
China’s increasingly favourable position in the regional balance of power is a product of the way Beijing has modernised and postured its armed forces. Crucially, the PLA’s development of anti-access/area denial (A2/AD) capabilities has been explicitly designed to challenge American military primacy by raising the costs and risks to US forces in the Western Pacific.51 Its massive investment in conventionally-armed ballistic and cruise missiles is the centrepiece of China’s “counter intervention” efforts.52 Over the past 15 years, the PLA has systematically increased, upgraded and extended the range of its inventory of missiles and launchers in what the US government has called “the most active and diverse ballistic missile development program in the world”.53 Although exact numbers are uncertain, the Pentagon estimates that the PLA Rocket Force now fields up to 1500 short-range ballistic missiles, 450 medium-range ballistic missiles and 160 intermediate-range ballistic missiles, in addition to hundreds of long-range ground-launched cruise missiles.54 These can strike targets throughout the First Island Chain and beyond, placing Japan, South Korea, Taiwan, the Philippines and Singapore well within China’s A2/AD threat envelope; and, in the case of the DF-26, extending this missile threat as far as the US territory of Guam, the location of major Air Force and Navy forward operating bases. China has also developed a specialised anti-ship ballistic missile, the DF-21D, which it recently test-fired from the mainland into the South China Sea, and is rolling-out a number of sea- and air-launched cruise missiles variants which will further extend the range and scale of its conventional missile threat.55 Looking to the future, China may well be ahead of the United States and its allies in developing advanced hypersonic missiles that would significantly worsen this threat environment.56
This growing arsenal of accurate long-range missiles poses a major threat to almost all American, allied and partner bases, airstrips, ports and military installations in the Western Pacific.57 As these facilities could be rendered useless by precision strikes in the opening hours of a conflict, the PLA missile threat challenges America’s ability to freely operate its forces from forward locations throughout the region. Alongside China’s broader A2/AD capabilities — including large numbers of fourth-generation fighter jets, advanced C4ISR systems, modern attack submarines, electronic warfare capabilities and dense arrays of sophisticated surface-to-air missiles — it permits the PLA to hold US and allied expeditionary forces at risk, preventing them from operating effectively at sea or in the air within combat range of Chinese targets.58 Following Beijing’s construction of a network of military outposts in the South China Sea that can support sophisticated radars, missile batteries and forward-based aircraft, the A2/AD threat is further intensifying in this critical waterway.
Figure 4: China’s growing missile threat to US bases and regional access locations