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Win-wins are gems in politics—Australia and the United States got a gem on Monday in their $3 billion rare earth minerals and Virginia-class submarine agreement, as it addresses key security concerns: the United States has the naval weapons Australia needs, while Australia has the rare-earth minerals and mining expertise that the United States lacks. Both countries should ratify the deal and, in future agreements, expand the security guarantees and the scope of mutual intervention.
Central to American security concerns are rare-earth minerals. These are used to produce much of the current advanced technology, such as chips, advanced medical equipment, smartphones, and advanced weapons systems. In 2024, the United States imported $170 billion in rare earth minerals, with 70% coming from China, which is clearly today the chief hostile foreign power to the United States. This is down from $186 in 2023, but the decline is due to increased American concern about its reliance on its chief adversary for rare earth minerals. The United States needs a way to protect its economy against China by finding new suppliers of rare earth minerals, and Australia has some of the world’s largest reserves. Like the United States, China poses significant security concerns for Australia. China is an authoritarian regime that has committed cyber and physical espionage to attack the basic foundations of Australia’s world-leading democracy, such as attempting to hack both government and private security networks. In other cases, China has also conducted sovereignty-violating military operations using its navy against its other neighbors. Submarines are becoming a primary source of military hard power worldwide, and the United States has the new Virginia-class submarine, the best new Submarine in the world.
Alignment with the United States could also harm Australian trade, as China is the country’s largest trade partner, as is expected under the gravity model of trade—countries that are relatively closer to one another will trade more. However, this Faustian bargain is untenable, as China seeks to eliminate liberal democracies in its region and will try to cut off Australia from its true allies under a policy of divide et impera, harming long-term Australian economic prosperity.
However, on both sides of the Pacific, there are incentives for cheating. For example, the United States is delaying delivery of the submarines. To mitigate these concerns, both governments should avoid the calls by a small number of their citizens for protectionist policies against the other government, for the common good. The deal’s structure, which also calls for further investments by both countries into rare-earth mineral production, will make the countries more integrated by tying the interests of domestic firms to those of the other countries’ firms, thereby reducing the likelihood of cheating. Further, the sale of submarines to Australia should continue to support the purchase of American weapons systems. Not only are the American weapons systems highly effective, but they will also be vital in countering any future Chinese aggression. More arms agreements will be needed in the future, including offsets to build more drone and missile parts in Australia to limit disruptions to the NATO supply chain, while also attracting foreign investment to American firms, similar to what has been done with the F-15K in South Korea.
Liberty dies without a firm foreign policy to defend it. Ratifying this gem of a deal and pursuing further military cooperation will be part of this necessary, pro-liberty foreign policy.