In a world influenced by competition between great powers, middle powers’ best path forward is to join forces in coalitions of the capable dedicated to building their power in ways that protect their relationships with the United States. Australia is leading the way, creating managed dependencies that turn vulnerabilities into leverage, starting with AUKUS.
Australia understood early that the middle powers punched above their weight and enjoyed outsized influence in the post-Cold War period because they were sheltered by US hegemony and, if it were enforced, the rules-based order. That system is now fracturing, hedging is no longer viable and key powers are calling for clear alignment.
Middle powers that don’t yet understand this shift imagine themselves more powerful than they are and mistakenly think that they can band together to rival the great powers. Geopolitical reality says otherwise, and Washington is unimpressed. Elbridge Colby, the US Under Secretary of Defense for Policy, took aim at this fantasy in July. The Department of Defense, he wrote on X, was ‘not concerned that this is a serious possibility’. Its worry is that allies will think it is and ‘waste valuable time, money, and political capital on a distraction.’
All middle powers are facing the same new reality. What differs is how they are responding. Canada, often compared to Australia, is pursuing a strategy that includes deepening its partnership with China, a choice that sits in direct tension with the imperative of staying anchored inside the US orbit as a valued ally. Given Canada’s deep interconnectedness with the US, its China embrace has provoked Washington into taking a harder line in its bilateral dealings with Ottawa. Canada’s play – implying it will cosy up to China to hedge against the US – is a strategic own-goal.
Unlike Canada, Australia has made its alignment with the US clear and concrete. Its position is not a concession of sovereignty but a strategic asset that took political courage to action. The instrument is AUKUS: a security partnership with the US and Britain backed by binding commitments and real capability. AUKUS makes clear where Australia stands and what it is prepared to do.
More than a simple defence procurement program, AUKUS is the most advanced real-world example of a coalition of the capable. Where old coalitions prized inclusivity and rhetoric, coalitions of the capable demand capability and action. They are flexible in membership, focused in mission, fast in execution and fierce in power. AUKUS meets the bar for building real military power, focused squarely on nuclear-powered submarines and a portfolio of advanced technologies
Australia’s next task is to correct its economic overexposure to China, a trading relationship worth A$326 billion in 2025. Despite political intent, meaningful diversification hasn’t materialised. What has changed is investment patterns, with Chinese foreign direct investment in Australia falling to among its lowest levels since 2006. This is a quiet but consequential structural shift. The operative logic for Australia is therefore not economic rupture but selective decoupling: the reduction of dependency in strategic sectors weaponised by Beijing, such as technology, infrastructure and critical minerals processing.
To better shield itself from China’s counter-moves, Australia should make itself indispensable to the US such that striking Australia puts core US security interests into play. Three opportunities stand out, the first being critical minerals. Australia holds some of the largest critical-minerals reserves, which will be crucial for the AI and defence supply-chains of the next era of great power competition. China dominates their processing. The US-Australia Framework for Securing Supply in the Mining and Processing of Critical Minerals and Rare Earths, signed in 2025, positions Australia as the US’s primary trusted partner alternative to Chinese processing.
Australia should also leverage its strategic geography. Removed from China’s dense strike- missile envelope while anchoring the southern Indo-Pacific, it provides forward basing for submarines at HMAS Stirling, long-range strike at Tindal and intelligence infrastructure at Pine Gap. This system of joint facilities, built over six decades, gives Washington strategic depth it cannot get elsewhere in the region.
Third, Australia can host data-centre infrastructure for US technology companies. This move is already in motion, as evidenced by AI company Anthropic’s ongoing negotiations with the Australian government for up to 1.4 gigawatts of capacity.
The goal is not independence from Washington, but a managed dependency inside the US orbit that makes Australia indispensable to the US. It is strategic savvy that turns vulnerability into leverage.
Australia’s geopolitical instinct, reflected in its hard alignment choices, gives it a credibility that hedging middle powers cannot easily claim. That credibility is the foundation for something larger: leadership of a coalition of the capable in the Indo-Pacific, and a bridging role between the Euro-Atlantic and Indo-Pacific theatres that no other country is positioned to fill.
The middle powers that flourished under the old order didn’t build the system that gave them influence. They benefitted from it. That system is fracturing, and the influence it conferred is being recalled. The states that understand this earliest and act with the clarity and conviction the moment demands will be the ones that shape what replaces it.
Australia is poised to win the moment.
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