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Australia is now a more ‘powerful’ nation than Russia. Here’s how it ranks in eight key areas

Australia is now a more ‘powerful’ nation than Russia. Here’s how it ranks in eight key areas

Australia has trumped Russia to become Asia’s fifth-most powerful country this year, according to an annual report that maps the shifting distribution of power across the continent.

The Lowy Institute’s 2024 Asia Power Index released this week shows Australia’s power in the region is “just holding steady”, but the faltering relevance of other nations has helped strengthen its position.

This year’s edition covers five years of data in the institute’s most comprehensive assessment yet. It ranks the relative power of 27 countries and territories in terms of the resources they possess and the influence they are able to exert.

Australia’s overall power increased by one point in 2024, lifting its rank for the second time in six years, although this was more a function of Russia’s decline since 2018 rather than Australia’s own rise.

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“Russia has gone down the rankings to sixth, so Australia has moved up. And that’s really more because Russia has been so distracted by its invasion of Ukraine that it’s not been able to bring the same resources to bear on its diplomacy in Asia,” Susannah Patton, director of the Lowy Institute’s south-east Asia program, told ABC News Channel. 

Australia is one of 15 middle powers in Asia. There are two superpowers — the United States and China — and nine minor powers.

The index evaluates how powerful countries are based on a weighted average of 131 indicators under eight key measures relating to their economic, diplomatic, cultural, and military strengths.

Here’s how Australia stacks up in eight key categories:

Economic capability

Australia’s economic capability improved in the 2024 rankings. 

This measure takes into account the size of the economy ($1.7 trillion this year), international leverage, technological and scientific sophistication, and global connectivity.

Economic improvements, however, were incremental in the report’s data period and fell more under the financial, legal and sanctioning powers Australia has abroad.

They were also influenced by exports and imports, investment flows, and travel connectivity.

The Albanese government says it has created close to 1 million jobs since coming to office, thereby “growing” the economy, but high inflationary pressures, interest rate hikes, unemployment, declining productivity and an overall softening labour market have dampened this growth. 

Research shows Australians are suffering the most protracted period of economic misery at present, despite pressures having reduced from the COVID-era peak.

Military capability

Australia’s conventional military strength also improved.

This measure looks at the total spending on defence, size of the armed forces, weapons and platforms, signature capabilities, and how postured a nation is to deploy rapidly and for a sustained period in the event of a conflict in Asia.

In April, the government launched its National Defence Strategy, which centred around renewed investments in the Australian Defence Force (ADF).

The 2024-25 federal budget sees Defence spending increase to $764.6 billion over the next decade, almost doubling annually. This includes an additional $50.3 billion committed this year, with the bulk of the government’s effort narrowed to the Asia-Pacific region.

Labor’s main redirection of funds has been towards accelerating long-range missiles and targeting systems, and making the military “more amphibious”, including through the acquisition of AUKUS submarines.

The Coalition has characterised this military expenditure as a “cut”, arguing the ADF needs more government spending rather than a re-prioritisation of existing funds.

Resilience

Australia’s resilience worsened in the 2024 rankings and it lost the most points here compared to other measures.

This relates to its capacity to deter real or potential external threats to state stability — measured in terms of internal institutional stability, resource security, geo-economic security, geopolitical security, and nuclear deterrence.

Australia’s most profound decline was in resource security, mainly driven by its worsening energy-trade balance (net energy exports) and rare earth metals supply.

“Australia’s … goal of becoming a globally diversified supplier of materials used for clean energy technology remains an aspiration, rather than a reality,” the report said.

Its internal stability also declined. Some factors influencing this may have been an uptick of hostile protests over climate change and the Israel-Gaza war, a heightened terror threat, and drop in immunisation rates.

Significantly, Australia is least resilient against climate change. Its ability to deal with threats like extreme weather, natural disasters, and food insecurity is surpassed by nine other Asian nations.

Criticism was voiced against the government for ignoring climate-induced risks to national security in this year’s Defence strategy.

Future resources

There was no change in Australia’s future resource rankings, but the measure has consistently been its worst-performing one.

It relates to the projected distribution of a country’s economic, military, and demographic resources in the decades to come.

Australia’s poor score reflects the projected smaller size of its economy and workforce in 2035 and 2050.

Treasury identifies an “aging population, escalating pressures in the health system, and climate change” as key challenges for Australia’s future economic growth

The government posted consecutive surpluses of $22.1 billion in 2023 and $9.3 billion in 2024 but the budget is still in a “structural deficit” and is expected to remain in a deficit for the next decade.

Australia’s forecasted GDP for 2035 is $3.17 trillion, compared to $2.49 trillion currently. Through to 2050, the number of working-age people are also expected to fall to 60 per cent of the total population, further impeding economic growth.

Economic relationships

Australia’s economic relationships improved in the 2024 rankings, measured in terms of trade relations, investment ties, and economic diplomacy.

Increased bilateral trade flows made it the sixth most influential player in the region, up from three places last year. 

Normalising relations with China — Australia’s largest two-way trading partner — is likely the key contributor, along with an overall recovery in its export market.

Australian exporters became severely crippled after Beijing imposed hefty tariffs and bans at the start of 2020, effectively wiping out billions of dollars’ worth of business.

The diplomatic stoush has thawed since last year, with suspensions on a range of products including coal, barley, timber and beef gradually lifted. Australia’s total value of exports to China in 2023 valued $218 billion, more than half of total trade in Asia.

Australia’s economic diplomacy continues to hold strong, with more than 18 free trade agreements in force and three under consideration.

Defence networks

Australia’s position in defence networks, where it performs best, remained unchallenged at 2nd place.

But the report says its score has been in relative decline over the past three years due to gains made by other countries, especially Japan. 

The strength of a country’s defence partnerships is measured through assessments of alliances, regional defence diplomacy, and arms transfers within Asia.

Australia’s $368 billion AUKUS project, a trilateral security pact with the United States and the United Kingdom, has evolved from being a planned acquisition of nuclear submarines to a much deeper inter-governmental partnership. Progress on the deal itself has been hampered by setbacks.

In March it was revealed Australia was seeking to advance its defence relationship with the UK to a “NATO-level“.

Regionally, Australia is the leader in the diversity and depth of its defence diplomacy, particularly the support it provides to other nations, the report shows. 

Diplomatic influence

Although Australia’s own diplomatic influence increased, its overall ranking declined by two places, overtaken by Indonesia and South Korea.

This measures the extent and standing of a state’s foreign relations, in terms of diplomatic networks, involvement in multilateral institutions and clubs, and overall foreign policy and strategic ambition.

The report points to evidence of a “honeymoon” effect from a change in government in 2022 — reflected in last year’s Asia Power Index — that has worn off this year.

“Experts surveyed were less enthusiastic about Prime Minister Anthony Albanese’s leadership at the regional level and Australia was somewhat less active in meeting diplomatic counterparts, in comparison to an initial round of regional engagement after the government was sworn in in 2022,” it said.

In terms of overseas travel, Mr Albanese has taken more or less the same number of prime ministerial trips as his predecessors, Including his 2023 visit to China, the first by an Australian leader in 50 years.

But simple travel counts are not the best way to assess a leader’s diplomatic profile, and requires qualitative analysis. Research shows that despite its apparently increasing influence, spending on Australian diplomacy has reached considerable new lows.

Cultural influence

Australia had the greatest gains in cultural influence in the 2024 rankings, showing a strong ability to shape international public opinion through cultural appeal and interaction.

In the context of analysing a country’s “power”, the index deems its cultural influence as important as its diplomatic and military relationships. 

One measure is the assets that help to enhance a nation’s reputation abroad. These include online search interest, cultural exports, number of brands in the Global 500, number of skyscrapers, passport power, and UNESCO World Heritage-listed sites. 

Then there is the regional appeal of a country’s media outlets and universities. This looks at how many international students it has enrolled in tertiary education and how much online interest there is in its news agencies, newspaper, television and radio broadcasters.

The measure also assesses people-to-people links in the region — diaspora influence, power to attract migrants, intake of tourists, and the availability of direct flights from regional airport hubs.

Australia’s overall “brand image” or reputation around the world is among the most solid.

A silver lining

Irrespective of Australia’s place in the rankings, and that its rise is more a factor of Russia’s decline, its prospects as a leader in Asia are promising. 

A secondary analysis within the report shows Australia exerts more influence than its raw capabilities would indicate, being highly networked and externally focused. 

As a top performing middle power, it sits on par with nations like Singapore and South Korea, whose outsized influence points to their “ability and willingness to work collaboratively with other countries to pursue collective interests”, the report says.

“The fact that Australia’s power is holding steady contradicts a more pessimistic view that over time, it will become a smaller and less relevant player as other much larger economies rise.”