I want to decline Paul Monk’s offer ^[1] to see Australian defence policy as an insurance policy. I think there are three good reasons for doing so.

The first has to do with the nature of military force. An insurance policy pays out only if disaster strikes; otherwise the ‘premium’ is essentially a donation to the insurance company’s profits. But an extant military capability pays out even in peacetime. Indeed, the best theorists of the use of force—people like Robert Art, for example—will tell you that force is principally used gravitationally rather than directly. That is to say, it is used more as a ‘shaper’ of events, than as an instrument of conflict. It ‘pays out’ every day, exactly the way nuclear weapons did during the Cold War, for example.

The second has to do with methodological utility. I honestly don’t see the gain in seeing defence as an insurance policy. Paul’s second paragraph suggests that the 2009 Defence White Paper was wrong to see China as a threat and to devise a future ADF around that perception. But why couldn’t the authors of that White Paper just say they were taking out insurance against a rising China? They might fairly describe their efforts in just such a fashion. So how does seeing defence as ‘insurance’ help? How does it give us better outcomes?

My third problem relates to the specific challenges of Asian geostrategic transformation. We can use existing statistics to get a sense of how likely we are to suffer traumatic injury or household fire, and we base our judgments of risk and the value of our insurance premiums on that basis. But transformational strategic environments come along only rarely, and we don’t have good models for dealing with them. Putting it at its simplest, half the world is coming late to the Industrial Revolution, and when the process has run its course we will live in a different world. Even if we could treat defence as a set of insurance policies, we don’t agree on what the principal risks will be in that different world, nor on their relative likelihood, nor on how much insurance we want to buy. For example, is the primary strategic risk in a transformational Asia one of power transfer (from one great power to another) or power diffusion (where all great powers are weak leaders)?

Personally, I have some sympathy for arguments that suggest we should find some metric to shape our strategic policy, because I think too much public debate focuses on the unlikely strategic futures rather than on the likely ones. But I don’t think seeing defence policy as an insurance policy solves that problem for us.

Rod Lyon ^[2] is senior analyst for international security at ASPI.