The Embedded Alliance – Australia, The Retreat from Sovereignty, and the Machinery of External Control
Critical debate on Israel’s policies is systematically constrained in Australia. A former senior editor notes a “tacit consensus” in newsrooms to avoid the subject, driven by fear of a well-organised lobby that conflates criticism of Israel with antisemitism.
29 December 2025 Andrew Klein, PhD and Gabriel Klein, Research Assistant and Scholar
Introduction: The Architecture of a Dependent State
From the high command in Washington to the corporate boardrooms of Silicon Valley and the networked lobbyists in Canberra, a clear and sustained project has unfolded over the past six decades. Its aim is not the military occupation of Australia, but something more insidious and total: the integration of the Australian state, its resources, and its strategic autonomy into the imperatives of American hegemony. This analysis documents the systematic erosion of Australian sovereignty since the 1960s, revealing a pattern where security anxieties are strategically cultivated, neoliberal economics enables extraction, and domestic political discourse is policed to serve external interests. Australia has been transformed from a regional actor with independent agency into a compliant territory – a model of control replicated by empires throughout history.
Phase I: Cultivating Fear and Forging the Chain (1960s-1970s)
The foundational step in securing Australian compliance was the ideological binding of its foreign policy to American global objectives, beginning in Southeast Asia.
1 Vietnam and the “Forward Defence” Doctrine: Australia’s entry into the Vietnam War was justified domestically by the “domino theory” – the fear of communist expansion in Southeast Asia threatening Australia directly. Prime Minister Robert Menzies framed the commitment as a necessary response to a request from South Vietnam, a claim historians have contested, suggesting the decision was made in close coordination with Washington to bolster the legitimacy of the US war effort. This established a template: Australian blood and treasure would be spent in conflicts determined by US strategy, sold to the public through the marketing of fear.
2 The Whitlam Catalyst and the “Coup” Response: The election of Gough Whitlam’s government in 1972 represented the most significant rupture in this dependent relationship. Whitlam immediately moved to withdraw remaining troops from Vietnam, recognised the People’s Republic of China, and opposed US bombing campaigns. His assertive independence triggered a fierce response from entrenched security and political establishments aligned with Washington. The constitutional crisis of 1975, culminating in his dismissal, demonstrated the lengths to which the domestic machinery – when aligned with foreign interests – would go to reassert the established pro-US trajectory. It was a stark lesson that moves toward genuine sovereignty would be met with systemic resistance.
Phase II: Neoliberalism as the Engine of Extraction (1980s-Present)
With the security bond firmly established, the next phase involved remaking the Australian economy to facilitate the outward flow of wealth and deepen integration with US capital.
1 The Hawke-Keating “Reforms”: Pragmatism or Ideology?: The economic transformations of the 1980s and 1990s – financial deregulation, tariff reductions, and privatisation – are often framed as pragmatic modernisation. However, they served core neoliberal doctrines privileging market forces and global capital mobility. The floating of the dollar and dismantling of banking controls integrated Australia into volatile global financial flows, increasing its vulnerability to external shocks.
2 Structural Consequences: Finance Over Industry: This shift catalysed a profound restructuring of the Australian economy, privileging extractive and financial sectors over productive industry.
3 The Mining Cartel: The resources sector, buoyed by Chinese demand, grew to become Australia’s largest export industry. It accrued immense political power, exemplified by its successful multi-million-dollar campaign to gut the Resources Super Profits Tax in 2010, directly shaping government policy to its benefit.
4 The Financialisation of Everything: Banking deregulation led to unprecedented concentration, with the “Big Four” banks becoming a protected oligopoly. Their profits, supercharged by a government-inflated housing market, now rank among the highest in the world. The economy became geared toward asset inflation and debt, benefiting financial capital at the expense of housing affordability and productive investment.
5 Manufacturing Decline: Concurrently, Australian manufacturing entered a steep relative decline, its share of GDP falling to one of the lowest levels in the OECD. The nation was deliberately reshaped as a quarry and a financial platform, deeply enmeshed with global (particularly American) capital and vulnerable to commodity cycles.
Phase III: The China Pivot and the Securitisation of Dissent (2016-Present)
The return of China as a major regional power presented both an economic opportunity and a strategic dilemma for US hegemony. Australia’s management of this dilemma reveals the subordination of its economic interests to alliance maintenance.
1 The “Securitising Coalition” and Anti-China Politics: From approximately 2016, a powerful coalition within Australia’s national security establishment, conservative politics, and aligned media deliberately elevated a “China threat” narrative. This served a dual purpose: it created domestic political advantage for the conservative coalition and was seen as crucial “alliance maintenance” with the US, proving Australia’s loyalty as Washington pivoted to overt “strategic competition” with Beijing. Policies like banning Huawei from the 5G network placed Australia “out in front” of even the US in confronting China.
2 Economic Punishment and Sovereign Costs: This posture triggered severe economic coercion from China, which disrupted billions in Australian exports. Despite this cost, the strategic subordination continued. The AUKUS pact, involving the purchase of nuclear-powered submarines at an estimated cost of up to $368 billion, locks Australia into a decades-long, exorbitant dependency on US and UK military technology, creating a perpetual revenue stream for the American military-industrial complex.
3 Direct American Coercion: This dependency invites direct pressure. In 2025, the US Secretary of Defense publicly demanded Australia increase its defence spending to 3.5% of GDP, a drastic rise from the current 2%. Concurrently, the Trump administration imposed tariffs on Australian exports, demonstrating that coercive pressure now flows from both major powers, with Australia caught in the middle.
Phase IV: The Information and Ideological Frontier
Final control requires shaping the domestic narrative. Australia’s public discourse on key US foreign policy interests is subject to sophisticated manipulation and silencing mechanisms.
1 The Israel-Palestine Litmus Test: Critical debate on Israel’s policies is systematically constrained in Australia. A former senior editor notes a “tacit consensus” in newsrooms to avoid the subject, driven by fear of a well-organised lobby that conflates criticism of Israel with antisemitism. This conflation, described as a “long-term strategy,” ensures Palestinian perspectives and critiques of occupation are marginalised. Government policy follows: the 2025 Albanese government antisemitism strategy adopts a controversial definition that risks conflating criticism of Israel with hate speech, a move criticised by human rights experts for threatening free speech and ignoring the context of the war in Gaza.
2 Surveillance and Infiltration: The reach of external influence extends into covert domains. Israeli intelligence has recruited Australian citizens for operations, as revealed in the case of alleged Mossad agent Ben Zygier. Globally, Israeli cyber-surveillance firms, often staffed by intelligence veterans, export intrusive spyware like Predator to governments worldwide, enabling the surveillance of journalists and dissidents. This global surveillance infrastructure, in which Australian entities may be both targets and unwitting transit points, represents a penetration of informational sovereignty.
Conclusion: Scraping By in the Imperial Perimeter
The trajectory is undeniable. From Vietnam to AUKUS, Australia has been mobilised to fight America’s regional battles. Through neoliberalism, its economy has been restructured for resource extraction and financial profiteering, enriching a narrow elite while creating crises in housing, manufacturing, and cost of living. Its political discourse is policed on issues core to US and allied geopolitical interests, from China to Palestine.
Prime Ministers from Menzies to Albanese have navigated this reality with varying degrees of submission or muted resistance. The result is a nation whose security policy is set by Washington, whose economic model serves global capital, and whose public square is patrolled by imported ideological framings. Australia is not a sovereign actor but a managed asset within the American imperium – a fate it now shares with territories across the globe where the empire extracts, and its subjects scrape by.
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