Australia Defence and Security Report Q3 2012

Australia Defence and Security Report Q3 2012

Published: June 2012 No. of Pages: 92 Price: US $ 1175




BMI's Australia Defence and Security report for Q312 examines the country's strategic position in the
Pacific region and the wider world. It provides an overview of the contemporary geopolitical challenges
facing the country, and the challenges it may face in the future. The report examines the trends occurring
in the country's current and future defence procurement, and the order of battle across its armed forces.
The report's general conclusion is that the Australian defence establishment faces some difficult
decisions, as fiscal constraints make some of the ambitions outlined in the country's 2009 Defence White
Paper increasingly difficult to realise. Some key procurement programmes could suffer as a result, and
capability gaps may be unavoidable.

Australia's supporting role in the United States' `pivot to Asia' is also examined, as US Marines begin
arriving in Darwin and the use of the Australian-owned Cocos Islands as a base for US drones enters
public debate.

The difficulty that Canberra faces in moving closer to the US while maintaining good relations with
China, its key trading partner, is also discussed. The recent decision to bar a major Chinese firm from
competing for a public contract due to national security concerns highlights the duality of Australia's
position on China, which it sees as a source of economic stability on the one hand and a potential source
of geopolitical instability on the other.

Over the last quarter BMI has revised the following forecasts/views:
BMI has updated the information relating to the anticipated budget squeeze that the Department
of Defence is expected to face, with analysis of where this leaves the ambitious procurement
programmes outlined in the 2009 Defence White Paper.
The progress of several key procurement programmes is brought up to date, including: the F-35
Joint Strike Fighter; the proposed upgrade of F/A-18 Super Hornets to the Growler electronic
warfare configuration; new submarines to replace the in-service Collins class; and new aircraft
and surface ships.
The operational decision to withdraw combat forces from Afghanistan in 2013, earlier than
planned.
The issue of refugees, who continue to reach Australia by boat with the assistance of Indonesian
smugglers. This is a sensitive issue for Canberra because of Indonesia's increasingly important
status as an economic and security partner.

Australia Defence and Security Report

Table of Contents
Executive Summary . 5
SWOT Analysis 6
Australia Security SWOT ... 6
Australia Defence Industry SWOT . 7
Australia Political SWOT ... 8
Australia Economic SWOT 8
Australia Business Environment SWOT . 9
Global Political Outlook 10
Major Risks Looming In 2012-2013 .. 10

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Global Flashpoints: Eurozone, Iran, Syria, Afghanistan, Korean Peninsula ... 10
Wild Cards To Watch ... 18
South East Asia Security Overview . 21
The Strategic Outlook For The 2010s ... 21
South East Asia In A Global Context ... 21
Challenges And Threats To Stability And Security ... 22
Main Islamist Militant Groups In South East Asia ... 24
Sino-US Rivalry In South East Asia . 31
Sino-US Power Struggle To Intensify Over The Coming Decade .. 33
Chinese Influence In Asia: A SWOT Analysis .. 34
US Influence In Asia: A SWOT Analysis .. 36
Does China Seek To ''Dominate'' Asia? . 36
Do Asian States Have To Choose Between China And The US? .. 37
Emerging Geopolitical Patterns... 40
Security Risk Analysis .. 43
Political Overview .. 45
Domestic Politics .. 45
Slipping Voter Support Could Lead To More Populist Policies ... 45
Long-Term Political Outlook 47
Three Key Challenges: Population, Climate Change, China ... 47
Security Overview .. 50
Internal Security Situation ... 50
External Security Situation .. 50
Armed Forces And Government Spending . 54
Armed Forces... 54
Defence Budget 57
International Deployments ... 59
Weapons Of Mass Destruction . 59
Market Overview 60
Industry Trends And Developments . 61
Arms Trade Overview .. 63
Procurement Trends And Developments .. 64
Industry Forecast Scenario .. 66
Armed Forces... 66
Defence Expenditure 66
Defence Trade .. 68
Macroeconomic Outlook ... 70
Staring Recession In The Face . 70
Company Profiles .. 76
Austal ... 76
BAE Systems Australia . 78
Boeing Australia .. 80
Raytheon Australia .. 82
Thales Australia ... 84
Country Snapshot: Australia Demographic Data ... 86
Section 1: Population ... 86
Section 2: Education And Healthcare .. 87
Section 3: Labour Market And Spending Power .. 88
BMI Methodology ... 90
How We Generate Our Industry Forecasts .. 90
Defence Industry .. 90
Sources 91Table: Election Timetable, Q312-Q113 . 14

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