State Failure in the South Pacific and Southeast Asia: The Importance of Australia's Response for National and Regional Stability

By David A. Smith
2016, Vol. 8 No. 06 | pg. 1/1

The occurrence of state failure is an important concern for Australia as it pertains to the security and stability of the broader region (Ezrow & Frantz 2013, pp. 16-17). Rotberg (2003, p. 1) defines state failure as the result of internal violence and corruption that leads to a situation where “positive goods can no longer be delivered to the inhabitants,” leading to a loss of legitimacy. Responding to so called failed states and states that are heading towards failure is essential in maintaining regional security. For Australia, areas of concern include the South Pacific Islands and parts of South-East Asia (Starr 2013, pp. 47-49), where Australia plays a large role in providing assistance through foreign aid and development programs and, at times, peacekeeping operations.

This essay argues that Australia must respond to regional cases of state failure and failing states in order to maintain both national and regional security. Evidence is provided in the presentation of an analysis of three key areas linked to the necessity for Australia to respond: firstly, current cases of state failure, Australia’s national security concerns and the consequences of not responding will be discussed; secondly, the economic and security costs of Australia responding to state failure early, compared to the economic impact of not responding, or responding only when national or regional security has been effected, will be considered. Finally, the use of foreign aid as a state failure early prevention tool, and the potential issues that might arise from the recent Abbott government reduction in foreign aid expenditure on both Australia’s national and regional security is discussed.

Failed States and Australia’s National Security

An early account of Australia’s concern with failed states can be traced back to 1893. The associated issues would now be considered transnational crime. In this case, Australia urged the British to take control of the Solomon Islands to mitigate governmental instability, reduce transnational crime rates, and quell the potential for another European power to take control of the Solomon Islands (Wainwright 2013, pp. 485-486). The failed state nature of the Solomon Islands returned 100 years later, with Australia providing aid and policing to assist in the stabilisation of the government (Wallis 2006, p. 90).

These efforts are seen as important for Australia’s national security, as the instability caused by a failed state can impact of the wellbeing and security of the state’s people, and on broader regional security. In addition, ‘failed states’ can lead to issues such as drug trafficking, money laundering, environmental degradation, large refugee flows, the spread of infectious diseases, illegal immigration and the harboring of terrorist organisations (Bisley 2006, p. 72).

Other states of concern for the Australian government regarding national and regional security include Timor-Leste, Papua New Guinea (PNG), Fiji and Nauru (Dobell 2012, p. 38). Following more than a decade of independence from Indonesia, Timor-Leste has suffered corruption, high unemployment, growing child prostitution and increasing rates of infectious diseases (Cotton 2007, pp. 456-457). Cotton (2004, p. 6) argues that the state’s primary issue, crippled infrastructure, comes from political corruption, which is highlighted by the structure of their 55 minister government cabinet in a state with just one million inhabitants.

On average, less than 30% of money allocated to each ministry makes it into the community, with most going to senior staff, and into their overly generous pension program (Cotton 2007, p. 461). This situation persists despite Timor-Leste having an income of over AUD$2 billion per annum from oil and natural gas exports (Glanville 2012, p. 19).

Nauru is another state considered to be failing, despite having the world’s highest per capita income from phosphate mining during the 1960s and 1970s (Weller 2009, p. 140). Although the mining has stopped, Nauru was left with a national trust worth AUD$1.3 billion in 1989 that many predicted could allow Nauru to continue as a strong South Pacific economy for up to 100 years (Weller 2009, p. 140). Reilly (2004, p. 482) argues that this was all but lost through poor investments, leaving Nauru to subsist only through the allocation of international foreign aid. Aid was increased to Nauru from Australia during the 2000s to stop the growing trade of money laundering and passport services that were being offered – alarming activities that could have negative impacts on regional security.

PNG has been labeled a failed state due to ongoing conflicts between the hundreds of ethnic and tribal groups and thousands of languages and associated dialects. This has resulted in what Reilly (2004, p. 483) labels ethno-linguistic fragmentation, where each small group looks out for their own interests, and not the interests of the state as a whole. Corruption is evident in the government, where members of parliament with more power gain money for their electorate, while others have little (Reilly 2004, p. 483).

Infrastructure is generally very poor, as highlighted by the existence of crumbling main highways, when some small regional villages have perfect roads due to the power of their local member of parliament (Reilly 2004, p. 485; Weller 2009, p. 138). This has resulted in inequality in PNG, and unemployment, infectious diseases and small scale violence are common. However, the ethno-linguistic fragmentation has allowed for continued democracy in PNG, because no one group is large enough to challenge the government (Reilly 2004, p. 483).

Fiji is of concern for somewhat different reasons than PNG. Corruption exists, but is less than in PNG, mainly because of the lack of ethno-linguistic fragmentation (Reilly 2004, pp. 481-482). Native Fijians make up about 54% of the population, while Indo-Fijians make up about 38% (Fraenkel, Firth & Lal 2009, p. 19). Weller (2009, p. 140) and Reilly (2004, p. 486) argue that, because Fiji has just two large ethnic groups, there is little fragmentation, but more instances of large scale violence. This is evidenced by the coups of 1987, 2000 and 2006, which were each sparked over concerns that the Indo-Fijian ethnic group had too much political power (Fraenkel, Firth & Lal 2009, pp.17-23).

These coups have crippled the Fijian economy, especially through lost tourism (Fraenkel, Firth & Lal 2009, p.147). The Fiji coups also impacted on the levels foreign aid received, as many donor states favoured the use of reductions in aid programs as a way to stabilise the state (Reilly 2004, p. 486). Ultimately this solution was limited, as it could have resulted in more instability than stability, so it was only a short-term ‘shock’ policy for Australia (Fraenkel, Firth & Lal 2009, p.147).

Claxton (2015, paras 6-9) proposes that these states have avoided complete failure because of the reactions and support of states such as Australia. Nauru’s past history of money laundering and passport fraud industries highlights the risks to both Australian and regional security (Coggins 2014, paras 21-24). Australia’s economic assistance to Nauru in return for the housing of asylum seekers is an example of assistance offered in an attempt to stabilise failing states, yet the assistance does come at a price (Bisley 2006, pp. 71-72). Australia needs to react to these threats, as failure to do so could result in mainland security issues, increased illegal migration attempts and other related humanitarian issues.

Economic and Security Costs Versus Economic Stability

If Australia does not respond to state failure, it could have a long-term economic impact, as waiting until the resulting instability is felt in Australia could significantly increase the cost to implement countermeasures. Miller (2013. pp. 17-18) believes that it is cheaper to react early and stop further decay of states at risk of failure for four key reasons. Firstly, the overall cost should be lower, or can at least be spread out over a longer period while stability is maintained (Dobell 2012, p. 38).

Secondly, early reaction can reduce the likelihood of Australia needing to commit police or armed forces to help ease violence, or at least reduce the required scale of deployments (Bisley 2006, p. 47). Thirdly, early reaction can hopefully prevent the failed states’ issues causing Australian national security concerns (Coggins 2014, para. 23). Finally, better economic stability in the states in question can outweigh the direct economic costs for the Australian government in a number of areas (Pattison 2010, pp. 30-32).

Reducing and diluting the costs associated with reacting to state failure is important to minimise the economic impact for Australia (Dobell 2012, p. 40). Miller (2013, p. 18) argues that early response to state failure generally reduces the likely overall cost of assisting with the stabilisation of these states. Moreover, it also allows governments to budget for ongoing assistance, rather than having to look for ways to quickly raise funds, often to the detriment of domestic expenditure (Kreijen 2004, pp. 106-108).

Early response also allows the donor state more time to plan and structure the assistance offered to give a greater possibility of success (Dharmapuri 2013, p. 67). In contrast, waiting for the situation to worsen may not only cost more, but could result in a rushed assistance package that does not give the best value for money result (Dharmapuri 2013, pp. 67-68).

Early response reduces the possibility of needing to provide police or military assistance to the failing state, consequently reducing the economic cost to Australia (Fraenkel 2006, p.32). It also removes possible personnel strains, especially if Australia already has military and police assets deployed elsewhere (Lambach 2004, p. 16). The Australian government is also very cautious in committing troops to regional areas in conflict, mainly because they do not want Australian troops potentially having to engage on local inhabitants (Newman 2007, p. 464). Weller (2009, p. 139) highlights this concern with the example of the Howard coalition government’s refusal to commit troops to assist during the Fiji Coups of 2000 and 2006. Australia’s focus has historically been on maintaining stability, peace and prosperity in the region, which highlights the need for Australia to react early to state failure.

Dobell (2012, p. 43) argues that reacting to failed or failing states early also greatly reduces the possibility of additional national and regional security issues. This could include regional security issues that prevent the movement of people and trade through the area (Dobell 2012, pp. 42-43). Claxton (2015, paras 14-15) believes that it is essential for Australia to maintain a secure region in which no areas are considered dangerous. For example, Weller (2009, p. 139) argues that ‘failed states’ often harbour pirates who can make certain shipping lanes too dangerous to use, resulting in potential national security and economic concerns for Australia.

With regards to security, a failed state in the region could lead to the necessity for higher levels of Australian naval activity in these areas in order to control the spread of such activities (Weller 2009, p. 138). Economically, this could lead to a rise in the cost of both imports and exports for Australia, and thus impact on Australia’s economy through trade costs and additional defence expenditure. This could include the potential loss of Australian export trade, because many states trade in preference with Australia due to its current high levels of national and regional security and stability (Claxton 2015, para. 21).

Ultimately, the possible stability achieved by Australia responding promptly to state failure greatly outweighs the economic costs. It allows for better results and has the potential to be less costly. Furthermore, the costs can be managed over a longer period of time. Ignoring state failure could lead to economic and national security strain on Australia, which could then lead to greater costs in attempting to stabilise the state or states in question.

Foreign Aid as a Support for Failed States and Regional Security Measures

Australia needs to respond to state failure to maintain ongoing regional stability. In the past, this has often been achieved through foreign aid programs. Claxton (2015, para. 3) argues that foreign aid programs in Australia’s immediate region are an investment in Australia’s national security. These programs help to provide sufficient assistance to people to greatly reduce the likelihood of inhabitants becoming involved in transnational crime and terrorism (Abuzeid 2009, p. 18).

In this regard, foreign aid is a valuable tool for the Australian government to use while reacting to state failure. Osborne (2002, pp. 301-302) also argues that foreign aid is one of the best ways for governments to react to state failure, as it reduces the likelihood of further instability. However, de Ree and Nillesen (2009, p. 303) state that stabilisation via foreign aid is a slow process, but one that is credited to be successful in many cases.

The Australian government will often focus its foreign aid expenditure on states of concern well before they are at a high risk of failure. This strategy goes beyond early response, and is proactive in assuring that both regional security and Australian national security risks are minimised (Djankov, Montalvo & Reynal-Querol 2006, p. 17). The Australian government has used this strategy in the past as they know that it is the best way to respond to state failure (Oechslin 2006, pp. 6-9).

Nielsen et al. (2010, p. 12) believe that Australia must respond, and that it makes perfect sense to do so at the earliest possible time to minimalise the overall cost. Australia is also considered to be the main economic and military power in the South Pacific, which means Australia also assists these states out of a feeling of responsibility and obligation within the region (Reilly 2004, p. 281). However, Australia’s national security is and will remain the primary concern for the Australian government.

Providing foreign aid to ‘failed states’ and states at risk can also be beneficial in that inhabitants may be more likely to see Australia as a ‘friendly neighbour’ (Anwar 2014, p. 46). This in itself can be useful if a police or military contingent is required to assist the state in question. For example, if the inhabitants know that Australia has already been actively assisting their state through foreign aid programs, they are more likely not to see Australians as a threat (Bergin & Hately 2015, pp. 4-5).

This perception could also lead to the local inhabitants feeling more comfortable working with Australian forces as they know they are there to help as a neutral peacekeeping force (Lambach 2004, p. 63). Hence, Australia not only needs to respond to state failure to maintain national security, but to implement early response policies through foreign aid programs to give Australia the ability to be more affective on the ground if police or military assistance is deployed.

Currently, Australia’s early response strategy via the rollout of foreign aid programs to counter state failure is at risk of being rendered ineffective. It has been argued that the Abbott Coalition government’s cut to foreign aid expenditure in 2014 will place Australia’s national security at risk (Claxton 2015, paras 7-8). The cuts amount to 33 percent between 2015 and 2018 and have the biggest impact within Australia’s immediate region, where just over 60 percent of Australia’s foreign aid programs are focused (Hayward-Jones 2015, para. 8). The impact could be even greater as so many South-East Asian and South Pacific states are already failing to meet their Millennium Development Targets, meaning that cuts to foreign aid programs could slow regional development growth even further (Claxton 2015, paras 10-11).

It is thought that the lack of assistance will lead to higher levels of instability through higher unemployment and higher poverty rates (Bergin & Hately 2015, pp. 4-5). This could also then lead to increased transnational crime and terrorism, placing both regional security and Australia’s national security at risk (Bergin & Hately 2015, p. 11). In this regard, the cuts to Australia’s foreign aid expenditure could be counter productive to Australia’s early response to state failure, which in itself highlights the importance for Australia to respond to instances of state failure in its region in order to protect Australia’s national security.


This essay has argued that Australia must respond to regional cases of state failure in order to maintain both national and regional security. Three key areas linked to the need for Australia to respond were analysed: state failure and Australia’s national security; economic and security cost versus economic stability achieved; and foreign aid programs as a good early response measure. It was argued that that PNG, Fiji, Timor-Leste, Nauru and the Solomon Islands are the states at the greatest risk of state failure. The major issues differ, but include ethno-linguistic fragmentation, corruption, attempts at gaining power and the resulting inequalities, outbreaks of disease, and violence.

It was argued that Australia must respond to state failure quickly to maintain both national and regional security. The possible cost savings and advantage of diluting the costs were also highlighted as benefits of responding quickly to state failure. Additionally, the benefits of foreign aid programs and the associated reductions in destabalising activities that these programs have on states in danger of failure were discussed. Finally, it was noted that the Abbott Coalition government’s policy of reductions to foreign aid expenditure goes against past proactive foreign aid programs that have assisted regional states to maintain stability. This could cause both national and regional security concerns for Australia in the years to come.


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