If that competition leads to armed conflict Australia could become involved as an American ally. Whether or not we are allied with the United States will not affect the outcome yet could expose us to devastating consequences. It is time for Australia to begin moving toward a policy of true self-reliance and eventual neutrality, a policy that will provide distinctly better long-term security insurance than the notional ANZUS alternative.

Hugh White has identified several options for Australia in a possible future confrontation between Washington and Beijing, including neutrality. Similarly, the 2009 Defence White Paper includes armed neutrality as a possibility but it does not examine its appropriateness. Instead, it adopts a posture it calls self-reliance but which in reality contains many caveats that necessitate a continuing dependent relationship with the US. And it is assumed that the US will come to Australia’s aid if a major power, such as China, were to threaten it.

In my view a policy of eventual explicit neutrality might best serve the national interest by recognising the reality that Australia is an isolated Western nation, with no historical enemies, distant from mainland Asia, and without a strategically-significant location.

Neutrality would mean that Australia could avoid involvement in conflict between the US and China while increasing its capacity to help diminish the risk of such conflict. Movement to neutrality is best done in stages over time. First, current rhetoric about the centrality of the American alliance should be dropped. Second, all policies should be decided in the light of a hard-headed assessment of Australia’s national interest. Decision makers must break from the ‘Anglosphere’ assumption at the root of current policy, namely the congruence of Australian and American political and strategic goals. Specifically, Australia should stand aside from American balance of power initiatives to contain China. Third, Australia must refrain from new defence commitments. A next and difficult step is for Australia to extricate itself from existing military and intelligence links with the US, such as Pine Gap. Eventually, withdrawal from ANZUS and adoption of a foreign policy based on an explicit declaration of neutrality could be appropriate.

A policy of true self-reliance need not affect good relations with the US. It is also possible to envisage circumstances in which the US would give greater weight than now to Australia’s views, for example if Australia were on the UN Security Council. But there would also be a loss of intimacy and doubtless some friction caused by adopting a neutral posture. Australia’s armed forces would have a different relationship with their American colleagues. It would no longer have the same access to American intelligence or to the newest American weapons. But the worth of intimacy is vastly exaggerated.

Much of intelligence is ephemeral. And, as we have seen, it is often wrong and may lead to disastrous consequences, like Iraq. It would be no great loss to have to become self-reliant in the gathering and interpretation of foreign intelligence. Where there are common interests with the US and others, for example counterterrorism and other unconventional threats, intelligence would continue to be shared.

White and others argue that the best way to prevent conflict between America and China is to build an Asian order based on shared power between the two. That may be the idea behind Australia’s various endeavours to create broad-based institutions for Asian and Pacific cooperation which involve both China and America. But as an American proxy Australia lacks credibility with China as an intermediary. That could change if Australia moved away from its embrace of the US.

The foundations exist to enable a self-reliant Australia to be a more influential player in the maintenance of peace in the region, if it chooses to take that path. Since World War II Australia’s diplomats never wavered in their conviction that a central pillar of the country’s foreign policy should be the development and maintenance of the closest relations with its northern neighbours. As a power independent of the US, Australia would be far better placed to regain comparable influence.

Major conflict between China and America is less likely if both powers are tied closely into the global legal order. Subservience to Washington undermines Canberra’s credibility to promote stronger norms in multilateral organisations. To give one current example, though Australia has signed the 2009 Convention prohibiting the use of Cluster Munitions, the proposed ratifying legislation will allow the US, which is not a signatory, to base cluster bombs in Australia or transit them through Australian territory.

The calculus for a change to neutrality is a bit like that for climate change. Over the next 15–20 years the impact of climate change is not likely to be serious. Equally, US predominance will continue for some years yet and the risk of armed conflict with China will remain low. In both cases the consequences of procrastination will become apparent only when it is too late to escape them. For Australia, to continue to put all its security chips, as is being done now, on the US alliance is to bet that the Anglosphere will continue to stay on top. But is it prudent to do so? I think not. Australia’s military involvement in support of the United States is most unlikely to tip the balance in any conflict; but it would expose Australia to possibly devastating consequences.

James Ingram AO is a Fellow at the Australian Institute of International Affairs (AIIA). He is formerly an Australian Ambassador, Director General of Australia’s overseas aid program (now AusAID), and Executive Director of the United Nations World Food Program. This is an extract from his address to the Australian Institute of International Affairs, Canberra Branch, 9 June 2011.