Since Federation, Australia defined its place in the world by its Big Power relationship. For the first half of the twentieth century, that big power was Great Britain. After the fall of Singapore in 1942, Australian oriented itself towards the United States. The near omnipresence of the United States in global affairs had left many Australians complacent towards a possibly dangerous world.

In the second decade of the twenty-first century, a series of events would occur that would change that forever.

A Troubled RegionEdit

Australian military theorists have for a long time written of threats to Australia's north. First Japan, then the Communists, and now an "arc of instability". Most of the nations to Australia's north posed some type of problem. Indonesia lack of inherent cohesion and rule over East Timor. Malaysia had the regions usual problem with extremist Islam, as well as the covetous glance of Indonesia still smarting over its defeat in 1965 in Confrontation. Singapore had the normal problem of being a tiny state in a dangerous place, if that was not enough, pirates had plagued its waters for centuries. The Solomon Islands had numerous political and economic problems. Fiji was ruled by a military dictator and had suffered the burden of racial tensions between Fiji's indigenous population and the descendants of Indian migrants.

Most Australian governments had tried for a balanced policy in the region. Australia's policy was driven by a number of factors. Most basic was the desire to keep outside problems 'outside. While active intervention was something Australia had not shrunken from, however always present was the perceived need for Australia not to appear "imperialistic" or "colonialist". Indonesia had often seen as a possible enemy. Its position made that justified in some eyes. Its policies justified enmity in the views of others. The rise of Suharto and GOLKAR in the late-1960s had led to repression and corruption but was supported by the West, especially Australia. Australia was one of the few countries to recognise Indonesia's annexation of East Timor as its 27th province.

During the early 1990s, relations between Australian and Indonesia worsened. The 1991 Santa Cruz massacre in Dili, East Timor led to outrage in the Western world. Leading the charge was Australia's foreign minister, Chris Marshall. Marshall favoured a more independent foreign policy, and believed that principles should drive foreign policy. Marshall was a relative novice in politics and diplomacy, and his "straight-talking" attitude was considered by some to be unsuitable for diplomacy. Relations between Australia and Indonesia soured throughout the 1990s.

Lurking in the background was China.

A Death in JakartaEdit

Indonesia had been under the rule of the 89 year old Suharto since 1965. His government had the distinction of killing more of its own people than any other regime supported by the West. He had also led an economic revolution in Indonesia. Foreign investors queued up to invest in Indonesia. A lot of the profits from these business ventures flowed into the pockets of Suharto, and his relatives and closest followers.

Over the years, the stress of office, combined with old age had ravaged his health. Remembering the fate of his predecessor, Suharto did not appoint a clear successor. On 27 January 2010, Suharto suffered a massive stroke and died.

The death of Suharto left a power vacuum in Indonesia. That power vacuum was to be filled, at least in the interim, by the Triumvirate. The Triumvirate consisted of the following:

  • B. J. Habibie, Suharto's Vice President
  • General Wiranto, Minister of Defence
  • General Susilo Bambang Yudhoyono, Commander of the TNI

Inexperienced commentators saw these men as one and the same. All Suharto's men. To an extent, this was true. However, more knowledgable people would tell you that these men were very different. Habibie was Suharto's Vice President. Seen by some as a logical successor to Suharto, Habibie was a civilian politician. He had been instrumental in Indonesia's technological advancement. He was seen as a moderate force. Wiranto was seen as an ardent supporter of Suharto's policies. He was behind some of Indonesia's more oppressive actions in East Timor. Wiranto was also regarded as the most anti-Australian of Indonesia's leaders. Yudhoyono was the best regarded of the tirumvirate. Like Habibie, he was Western educated (albeit at Fort Benning, rather than a German university).

The Bougainville InsurgencyEdit

Bougainville had been one of the most conflicted regions in Australia's state of Papua New Guinea. There are various reasons for the conflict, including the copper mines on the island, and the economic and environmental implicaitons of the mine. Many Bougainvilleans have long believed that they are not getting any benefit from the mine. Protests at the mine site, and at government offices of both the Federal Government and the State Government of Papua New Guinea are commonplace. These demonstrations rarely go beyond stones and Molotov cocktails.

During the late-1980s and early 1990s, the small Bougainville Revolutionary Army carried out a number of shootings and bombings on Bougainville, but they lacked outside support. They could not sustain a revolution on World War II weapons left behind, and stolen mining explosives. Action from the Australian Army (particularly the Royal Pacific Islander Regiment) the Australian Federal Police, and the Royal Papua New Guinea Constabulary quashed the revolt quickly. While the revolt was defeated militarily, it was not defeated politically. Bougainville still elects only pro-independence parties or candidates to Port Moresby or Canberra, and civil demonstrations continued.

For the first few months of 2010, demonstrations in Buka increased in number and intensity. During a demonstration on April 21, 2010, a demonstrator was shot by the police. The police later claimed that the demonstrator was armed, but no independent investigation could confirm that fact. The death, combined with the prodigious use of CS gas against demonstrators aroused outrage in mainland Australia and New Zealand. Believing that the political tide in Canberra was turning, BRA cadres in the jungle began to organise. In early May, the BRA had ambushed two RPNGC patrol vehicles, raising tensions still more. After the shooting of two RPNGC constables in Buka, the Police Minister of Papua New Guinea advised the Premier that the RPNGc could not control the situation by themselves. They appealed to Canberra for military assistance.

The first military assistance provided was a reinforced infantry company from a PNG-based Army Reserve Battalion. D Company, 2 Royal Pacific Island Regiment (2 PRIR) were supplemented by 4 contractor-operated Bell 412 Helicopters, and a Mortar Platoon from 2 RPIR. An SAS Troop was quietly inserted into Bougainville to act as a reconnaissance force. At this stage of the conflict, Canberra were being informed by their own intelligence people that this was a minor affair, that the guerillas were poorly armed, and that they lacked support from the outside. the implications of this intelligence (as far as the Marshall cabinet saw it) was that the primary aim of such a force was not to defeat the guerillas of the BRA, but to assuage the concerns of the PNG government.

To support the 2 RPIR unit, some regular services were provided, including intelligence. The Intelligence Officer appointed to support what was now called "Operation Lamprey" was Captain Michael Pinkerton. Pinkerton was a capable intelligence officer who was part of 2 RPIR's regular cadre. He had been briefed as to the policy, and the beliefs of Canberra, and he saw his main job as proving, or disproving, Canberra's beliefs. Pinkerton had several sources of intelligence. These included prisoner interrogations; civilian reports, RPNGC information; Federal Police information; and Australian military reconnaissance (including technical means such as ELINT). Pinkerton trusted the last two sources, and believed that the first was useful. He dismissed most civilian reports, and the RPNGC was reputed to be the most corrupt and least efficient police service in Australia (beating Queensland for corruption, and Victoria for inefficiency). The first priority for Pinkerton and his section was finding the BRA location and intentions. This he set out to do with aerial reconnaissance, SAS patrols, and mobile phone interceptions by the AFP.

Pinkerton found a sizeable BRA camp, and the commander of the 2 RPIR contingent, Major Warren Penapul, decided to attack. Pinkerton, and most of the regular officers advised against an attack this early, but Penapul was under political pressure from Port Moresby to achieve results. The Bougainville mine was vital to the economy of Papua New Guinea and the revenue of the PNG state government. Crucially, Penapul was a reservist who had never seen combat. His plan of attack advocated mortaring the camp before an infantry assault from three sides, using each of his rifle platoons. The fourth side was to be held by a police taskforce, both AFP and RPNGC tactical officers.

The assault was a disaster. The camp was essentially empty, and one of the infantry platoons and the police unit were ambushed by the BRA. 8 soldiers and three police were killed. There were problems adjusting mortar fire to support the units under attack, and 3 of the fatalaties were caused by friendly mortar fire (before Penapul ordered the mortars to cease firing all together). A clearing patrol after the action revealed ten BRA dead, but no arms and ammunition. The inquests into the deaths of the soldiers and policemen revealed one totally unexpected aspect of this attack - they were not killed by the common civilian calibres in PNG (.22 Long Rifle and .303 British) or by World War II weapons (.30 Carbine and .30'06), they were killed by modern military bullets (5.56mm NATO, 7.62mm NATO, 7.62mm Soviet).

The political fallout from the debacle (described by one news outlet as "Australia's Charge of the Light Brigade") was immense. The Papuan Police Minister and Australian Defence Minister resigned, and the PNG state government government almost fell. The appointment of the highly respected New Zealander Dr. Wayne Mapp as Minister of Defence after Kim Beazley dealt with some of the criticism of the Federal Government, but something needed to be done. As a temporary measure, a regular infantry battalion was sent to Bougainville to patrol, and protect installations on Bougainville. The presence of the regulars quietened the BRA, at least temporarily. It at least bought the government time to formaulate a better response.

For the Governmentm, the concern was the public. The Government felt it had not only to make a new plan, but deal with public opposition. From the book "The PM's Ear"

Marshall used to harp on it all the time. Being PM is about leadership, he'd say. There are times for consensus, and times to say "This is the way it has to be done" and to lead everyone down that path. He persuaded us that keeping Bougainville was necessary for PNG and Australia. He was really ready to embrace every military option the generals gave him. I had to remind him of von Clausewitz. I gave him a quote, because i knew he liked direct quotation, so I quoted "War is not merely a political act, but also a political instrument, a continuation of political relations, a carrying out of the same by other means". Of course, if you quoted something to him, even something as profound as von Clausewitz on war, it wouldn't end the discussion. Marshall asked me why I quoted him. I told him that there were legitimate grievances in Bougainville, and that we need to find a way to accomodate legitimate grievances without granting all the BRA's aims. He then asked me the one question I was hoping he wouldn't ask - how? On this, none of us were sure. We needed information.

To try to persuade the Australian people of the necessity of fighting a war, Marshall spoke to Australians of the wealth of the Bougainville mines, and about the dictatorial ambitions of the BRA's leaders. A skeptical Australian people decided to stick with Marshall ... for now. It was clear, however, that a repeat of the previous debacle would not be tolerated.

The Cabinet, and the Defence Force wasted little of that time. Parliament passed a Bougainville Special Powers Act which provided for a Special Commissioner to run things on Bougainville. He would be in charge of all security on Bougainville. Canberra managed to strong-arm the PNG state government into allowing the Special Commissioner to manage the RPNGC personnel on Bougainville. The Government selected a retired soldier as Special Commissioner for Bougainville. The man they chose was General Peter Leahy (rtd), who had been Chief of the General Staff from 2002-2008. Bougainville was not under effective martial law. General Leahy was given a clear directive, suppress the BRA, and secure Bougainville to the point at which the RPNGC can take over security confidently. He was to be given the means necessary to do it.

The Bougainville Task Force was formed to act as the military arm of General Leahy's commission. The military Task force included a regular infantry battalion, a reserve infantry battalion, a reserve artillery regiment, a Squadron of Bushmaster IMVs, and aviation elements. (Full order of battle). Navy and Air Force units were assigned to support them. The commander was Brigadier Warren Oakover, a regular infantry officer who had just finished a tour commanding 4 Brigade, which was Australia's rapid deployment force.

To manage the police component of the operation, Deputy Commissioner Mark Blackburn of the New South Wales Police Force was seconded to the AFP. Under him was an AFP Special Mission Group consisting of 400 officers to supplement the RPNGC on Bougainville. They would train and advise the RPNGC, accompany patrols (acting as the "Patrol Constable" to legally search and arrest suspects, which was legally complex for soldiers), as well as providing a tactical support capacity. The officers for this SMG were recruited from all Australian police forces, with the largest contingents coming from New South Wales and Queensland.

The Bougainville task force set up its base at Panguna, near the site of the now abandoned mine. Oakover said of this choice

I chose Panguna for practical and psychological reasons. Tensions over the mine were one of the causes for the civil war, so I thought that setting up the base there would be provocative to the BRA. Provoking the BRA was important as I wanted to draw them into battle. That would be the best way for us to learn about their tactics, their strengths and weaknesses. It would also provide us an opportunity to inflict casualties on them and hurt their morale.

In practical terms, Panguna had a lot of facilities, so it would be easy to setup there quickly. We could operate helicopters and even short take off aircaft from the site. Leahy liked the choice. It took us out of the way of the island's local government and police force, so we could be highly independent in our operations.

The Government compulsorily acquired the site from Rio Tinto without any protest, and also acquired a circle of land around the site of a 6 km radius to protect the base fom mortar attack. The construction of the base was completed quickly, and 6RAR moved in as 3RAR pulled out. The reserves moved in two weeks later.

One Australian officer who fought in Bougainville wrote "We lifted our tactics right out of Vietnam. Deny the enemy the ground, and he is beaten". That was at least the theory. The practice was much harder. For one thing, the second deployment was still somewhat hasty. Acclimatisation to the conditions took time. This and disease meant that it took almost a month for the Bougainville Task Force to become efficient after arriving on the island (they had spent a month training ion Queensland before deploying to Bougainville). The basic strategy chosen by Oakover was intensive patrolling, and civic action. Patrols were initially kept relatively close to the base. In the early stages, his indirect fire support capability was limited to artillery on the Panguna Base, and two mortar platoons. Before the capabilities and numbers of the BRA were better known, normal patrols almost never went beyond artillery range of the base. Only the SAS were allowed to venture beyond artillery range at this early stage. Later on, 4 Hueys equipped with rockets and miniguns were added to the force (these Huey gunships are called "Bushrangers" in the Australian Army).

SAS intelligence gathering, and infantry patrolling revealed that the BRA were not as highly organised as the Viet Cong had been. They appeared to have about 3000 active members. Most of these men were in local cells. They had two "Strike Battalions" of 300 men each. The strategy and aims of the BRA was equally simple. Their first aim was survival. If the BRA could survive as a viable force, then it might out wait Australia's political leaders. Their second aim was growth. The forces they deployed were extremely small, and they needed help and recruits. Their third aim was a classical guerilla aim of dividing the people from the government. This was to be done by attacking government installations, as well as intimidating anyone who cooperated with the PNG state government or the Australian government. The BRA decided against assassinations because they felt that assassination had too much risk. The BRA believed that they had a certain amount of public support in Australia, and they believed that an assassination campaign would turn people against them.

There were almost no set-piece battles in Bougainville. Combat in Bougainville took two forms. The first was the encounter battle, in which two opposing units encounter each other inexpectedly and begin to fight. This was by far the most common. The second type of battle was the ambush, in which one side attacks the other by surprise. The first few contacts revealed that the BRA had good weapons, and some were well trained. The Strike Battalions were highly trained. Australian patrols reported contacts with enemies with modern weapons. The types of weapons captured were common enough in South East Asia. M16s and AK-47s were the most common. SLRs were also numerous. These weapons could be bought in Australian gunshops, but Australian intelligence hoped that more information could be found from investigation of the individual weapons. The BRA had also acquired heavy weapons including RPG-7 rockets, and 81mm mortars. The mortars were American types. The exact type had previously been used by the Australian Army, but had been out of service for 30 years, which appeared to rule out theft from the Army. The RPG-7s were more instructive. Their presence confirmed that weapons were being smuggled in. The RPG-7s were not used by the Australian Army (though Australian units had captured them in every combat theatre from Vietnam to Iraq).

In addition to the military activity, the Australian Government instituted a civic action programme. This civic action programme consisted of agricultural efforts, health care and clinics, and education programmes including scholarships to universities in Papua New Guinea, and the rest of Australia. In addition, the Australian government investigated the activities of the mine, and a way to get the mine to benefit the people of Bougainville first while respecting the need for royalties to benefit Papua New Guinea as a whole.

The third aspect of the government's strategy in Bougainville was a naval and air cordon around the island. This cordon was intended to prevent the arming and funding of the BRA. Coastwatch aircraft and Navy and Customs patrol boats stood guard on Bougainville. The plan was simple enough, aircraft would find every ship coming to Bougainville visually or by radar. The aircraft would then vector patrol boats to these ships. The aircraft had an additional step - they could talk to the ship themselves, and vector them to a area near a patrol boat. Their attitude to this request was thought to be informative.

As good as this strategy was, no one believed that this war would, or could, be ended quickly. After seven months, BRA activity had slowed down, but the reserve element of the ad hoc Bougainville force was the weakest link. The root cause of this was simple, the regular Army was designed to organise into Brigades, and this bond between battalions and regiments was broken to form an ad hoc force. This was another element of the Marshall government's policy of fighting the war on the cheap. The deaths of six reservists in an ambush that no regular soldier would have walked into was a demonstration of this weakness. However well reservists were trained, and however experienced some of the older reservists were, a war as difficult as a counter-insurgency is a business for regular soldiers, people who do soldiering for a living and practice it constantly. The Defence Force advised the government that a regular brigade would be necessary to win the war in Bougainville.

The government had two more reasons not to send a complete regular brigade to Bougainville. The first was that there was already an Australian Army brigade fighting in Afghanistan, and it was believed that sending another brigade on a combat deployment would spread the Army too thinly. The second reason was political. Army Headquarters advised the government that 5 (New Zealand) Brigade was the best brigade to send to Bougainville. In military terms, it made perfect sense. It also made sense culturally (5 Brigade contains the highest proportion of Pacific Islanders of any Australian Regular Army brigade). Politically, it made no sense at all. The Liberal Democratic Party was not as strong in New Zealand as it would like to have been. Unlike all other ARA brigades, 5 Brigade units contains mainly New Zealanders, particularly in terms of Other Ranks and Sergeants. Sending 5 Brigade into Bougainville would mean that the burden of the war would no longer be distributed across Australia, rather it would fall on New Zealand's shoulders. The Marshall Government spent a long time debating this issue. Marshall favoured sending them, but his Deputy Prime Minister (a New Zealander) did not, and his Minister of Defence (another New Zealander) had reservations too. It was not until late August 2010 that the decision to deploy a regular brigade to Bougainville was made. Once the decision was made, the Government had managed to get most of the national and New Zealand media behind the war effort, and casualty rates had been dropping. By the end of November 2010, 5 Brigade had taken up the fight in Bougainville. The presence of regulars was a positive move, both in terms of relations between the Army and the Bougainvilleans, and in terms of the military fight against the BRA.

Over the next few months, the regular soldiers settled into a good routine, while the civilian element of the force assumed the task of making the lives of the Bougainvilleans better.

Human ResourcesEdit

Bougainville and Afghanistan had shown the government that there was a problem in either the Army or in foreign policy. For Australia's current foreign policy, the Army was too small. It had one Brigade deployed to Afghanistan, one deployed to Bougainville, plus three more including one designated as a rapid deployment brigade (3 Brigade), and the only mechanised brigade (1 Brigade). To sustain its current operational tempo, and to cope with a deteriorating strategic situation, the Army needed to be larger.

In military recruitment, the Marshall government had been a victim of its own success. Defence has never been known for overpaying soldiers, and the economic success of the previous twenty years had left gaps in the ranks of the ADF. The Navy and Air Force had retention issues, and the Army had recruitment issues. The Government commissioned a group of retired senior officers and defence bureaucrats to enquire into defence personnel issues. In June 2011, they recommended enlargement of all services, and the creation of an aircrew reserve to ensure that aircrew who do not wish to remain in the regular services can still serve Australia. They made the expected recommendations of bonuses for retention, but they sensibly pointed out that "a government can only throw so much money at this issue." Controversially, the panel recommended National Service for three years for 19-year olds as a way to make up the Army's recruitment numbers. All recommendations bar National Service were accepted.

East Timor - PreliminariesEdit

The policy of the Liberal Democrats on East Timor and Indonesia had been, according to the editor of The Australian newspaper "neither Arthur nor Martha". Although the government was prepared to make pronouncements on East Timor, the government still recognised East Timor as an Indonesian province. Shortly after the 1991 Santa Cruz Cemetary Massacre, East Timor dropped off the news pages of the world, and pro-East Timor activism became almost the sole preserve of University students. Nevertheless, some idealistic journalists wanted to tell the world East Timor's story. A group of four independent journalists, who had accredited themselves for cover "cultural events in Bali" went to Bali in May 2011. Once in Denpasar, bribed the captain of a fishing trawler to take the journalists to East Timor. Once in East Timor, they met with FALINTIL fighters. They intended to make a documentary about FALINTIL's guerrilla war. They made arrangements to have their film smuggled out of East Timor and back to Australia. They wore clothes with "PRESS" markings and carried their press credentials. After a week, and with good footage of an attack on an Indonesian convoy, they were captured. They expected to be deported, and probably imprisoned. In fact, they were not even brought to trial (though the FALINTIL fighters with them were tried). The journalists were simply shot dead and buried in a shallow grave. The Indonesians covered their tracks well. The FALINTIL who were not sentenced to death were sent to a detention camp in Sulawesi. The murder of the journalists would not have come to the attention of the Australian government but for an anonymous package delivered to the Australian Embassy in Jakarta. It was scanned in the normal manner for explosives, detonation equipment, and biological agents (i.e. anthrax spores). It was found to be clear, and inside the package were four passports, several SD cards and a hard drive from a video camera. On the hard drive was the raw footage for the documentary. The SD cards came from the digital cameras owned by Indonesian troops who had taken photos of the murders of the journalists and their bodies. The materials were rushed to Australia by diplomatic pouch. The AFP investigated the material, and found that it was geniune.

The Marshall Government now had to decide its response. Marshall would liked to have controlled the release of the information in order to devise a good foreign policy response, but it leaked very quickly. The video became an instant YouTube hit, with an extremely heated comments thread. The Indonesian Embassy in Canberra was the target of demonstrations. The Consulate General in Perth was stoned, and the Consulate General in Melbourne was put to the torch. Foreign policy and domestic politics have always had an uneasy relationship, especially in a society with a relatively large number of immigrants. The first instinct of the diplomats was to take a "reasonable" line, the first instinct of politicians is to take the line that will give them the most votes. The Marshall government called for an apology, the return of the bodies to Australia at Indonesia's expense, and the extradition of the killers to Australia for trial. The Government also called for financial compensation for the families. The Indonesian Government paid up, but did not apologise, return the bodies, or turn over the killers (who were already dead - they embarrassed GOLKAR). The protests died down after a few days, and the family tried pursuing the Indonesian government in Indonesian courts, a futile business (with the Australian government paying the legal costs), but it gave the families something.

The Australian response was to impose a trade and travel ban on Indonesia. Indonesia's diplomats were also expelled from Australia. Many Western governments, as well as Japan and South Korea, imposed similar sanctions. In addition, Australia pulled out of the Timor Gap Treaty. Australia also formally withdrew recognition of East Timor as Indonesia's 27th province.

The Day The Dollar DiedEdit

9 June 2011 went down in history as the day the US dollar died. That morning, US markets awaited Chairman Bernanke's announcement of QE3. Financial journalists believed that if this didn't work, the US would slide into a depression for the rest of the decade. The Dow Jones closed the previous day at a high, gold reached $2200 per ounce, and silver $100 per ounce, the dollar index was holding at 57, and official unemployment was at 12%. At 0815 (US Eastern Time) that morning, the Chinese Government announced that they could no longer allow the US Government to devalue their holdings of US Government Securities. They had been voicing their concerns privately for several years to both Bush and Obama, but by June 2011, the Chinese accepted that the US Government would never stop paying its bills in an ever falling currency. China announced that it had to stop purchasing US Government bonds. They believed a Western recovery was unlikely without reform. The announcement shattered Wall Street. The Dow plummeted upon hearing this announcement (0845 US Eastern Time). Gold shot up to $2600 per ounce in an hour. US media outlets awaited a statement from the White House. President Obama told the reporters that he had spoken to several G20 leaders who pledged to increase their purchases of US bonds. Australia was one of the few G20 leaders to explicitly refuse to help the US by purchasing bonds. Obama stated that Chairman Bernanke believed that a strong dollar would result from QE3. He defended his increases of entitlement programs, and tried to state that the impact of China's new policy would be minimal.

Dow futures fell 850 points in the first twenty minutes of trading. The Government suspended the markets for one hour. By 1000, Americans were rushing to the grocery stores to buy up as much as possible while their money could purchase anything. After the markets reopened, the plunge continued. Investors fled from stocks and bonds into commodities, which were now seen as the only safe area. Over the next two hours, the Dow dropped 1500 points. The markets closed again to allow the Federal Reserve to inject $200 billion into the markets. Chairman Bernanke announced that QE3 was to be postponed until further notice. Congress was called to an Emergency Joint Session. Some of the members said they regarded China's statement as a "financial declaration of war".

By midday, several American cities started to see civil unrest as people went to the stores, only to find that they had been ordered to close. Streets ere choked with traffic, and violence began to break out. The Pentagon alerted the National Guard for a deployment on to US streets to aid the police if the situation wasn't brought under control soon. The media called on the government to act before the unrest became worse. Financier George Soros said that a run on US government bonds was imminent, and Obama could do nothing about it. Gold markets closed at midday at $3500 per ounce. The President ordered that markets be closed due to civil unrest.

The Federal Reserve announced that it would buy US government bonds to calm investors, in fact this only made them more fearful of a dollar collapse. At the end of the business day, the Federal Reserve injected $1.5 trillion into the markets to halt the sell off. Stocks began to rally, but it was already too late for America. Its anxious population was perched in front of TV sets and computers to try to learn what life would be like with a collapsed currency. From their windows, they could see fires in the cities, and hear the shots as police and National Guardsmen battled it out with gangs and looters.

The sun had set on the United States.

Australia's ReactionsEdit

Australia's first response to the US dollar collapse was to massively accelerate their program of selling of US dollar denominated Reserve Bank assets including cash and US Government Securities. These were sold in favour of gold, and silver. Prime Minister Marshall's refusal to help the United States did lead to rumblings in the American media, however the Obama Administration was not prepared to abandon good relations with Australia. Nevertheless, the relationship would have to change.

Since 1942, Australia's defence has depended on the relationship with the United States. The collapse of the US dollar meant that the US could no longer pay for its vast military complex. It also meant that the troops were required at home to control the civic disturbances that were commonplace in the US. Hyperinflation in the US meant that the Australian Defence Force were able to make their remaining payments of US-made armaments. Easy Foreign Military Sales contract terms (with fixed prices) enabled Australia to build up its stocks of munitions and missiles. The US government eventually asked for payment in gold or Australian dollars. Australian dollars were valuable foreign exchange. US dollars had become worthless paper.

With China becoming a dominant regional power, the democracies of the Asia-Pacific faced their worst nightmare: no superpower to balance China. Prime Minister invited the leaders of the region's key pro-Western nations to Brisbane to discuss the new situation. Invited were the leaders of Japan, South Korea, New Zealand, the Philippines, Malaysia, Singapore, Brunei, Papua New Guinea, Thailand, and India. Together, they decided to form a new economic group, provisionally named the APACSECECON group, short for Asia-Pacific Security Economic group. The leaders agreed on matters including free trade, and combined military exercises.

The governments of Indonesia and China opposed the conference (or, they opposed their exclusion from the conference), and President Hu Jintao and General Wiranto signed a "Friendship Pact". The moderating forces in Indonesia were effectively silenced. Although some sought out contacts with countries such as Australia, no one in the democratic governments of the Pacific was willing to listen. Pragmatism had taken a backseat to politics in the South Pacific.

To bolster national defence, the Marshall Government implemented a National Service Scheme, which was announced on the 1st of July. The scheme was essentially the same as that recommended by the government's previous enquiry, with 19-year old males being selected for three year of full time service, and five further years in the reserves. In addition to the Army, shore postings in the Navy, and non-technical musterings in the Air Force were also opened to National Servicemen. The first intake of national servicemen started in November 2011.

The Marshall Government secretly decided to implement a nuclear weapons program. Australia's high level of technological advancement, and its extensive nuclear power industry with 20 reactors for research, fuel production, and electrical generation. Since the 1980s, Australia had possessed a completely independent nuclear fuel cycle. Intelligence agencies reported that, with the necessary funding, Australia could make a nuclear weapon in one year. On 12 July 2012, seismographs in the southern hemisphere recorded a small event on Buckle Island, an Australian territory in the Antarctic. The official story was that the "Buckle Island tremor" was a volcanic event. In actual fact, it was a sub-scale nuclear test which proved that Australia's warhead design was viable. By the end of 2012, Australia had a small arsenal of nuclear weapons.

Australia had settled two types of gravity bomb, deliverable by F-15E or F/A-18 aircraft of the Royal Australian Air Force. The first design was based on the French AN-52 bomb, a tactical weapon, it was designated AS-1 (Australian Special 1). The AS-1 had a selectable yield with the low setting being 6-8 kilotons and the high setting being 25 kilotons. The second was a strategic weapon based on the French AN-22. It was designated AS-2 (Australian Special 2), and had a yield of 70 kilotons. The French partnership suited the economics of what was now being called the "Post-American era". With no convenient paper currency for international trade, the Eurozone nations were in a trick position, having given their gold to the European Central Bank. France and Australia made an agreement to barter Australian uranium for French knowledge, technology, and certain materials. The deal extended the defence cooperation arrangements between France and Australia, with specific reference to the overseas collectivités of France in the South Pacific.

Increasing TensionsEdit

Australia's nuclear capability had been successfully kept secret. There were suspicions, but these had been successfully deflected by the Marshall Government. The collapse of the US as an economic and military superpower emboldened Indonesia, and General Wiranto in particular. In September, Wiranto announced that Indonesia had in its possession a number of North Korean Taepodong-1 ballistic missiles. From launching sites in Java, these missiles could reach Darwin, as well as important Australian mineral and energy sites in Northern Australia. Australia already had a theatre missile defence capability. In 2006, Australia had acquired the Patriot PAC-3 missile for the Royal Australian Air Force and the RIM-161 Standard Missile 3 for the AEGIS warships of the Royal Australian Navy. For Prime Minister Marshall, Wiranto's announcement came at a bad time. The Australian Parliament was coming close to the end of its term, and an election was due soon.

Australia DecidesEdit

On 1 November 2012, Prime Minister Chris Marshall advised the Governor General, General Sir Peter Cosgrove, to dissolve the Parliament and call elections. The government was doing fairly well in the polls, however the Liberal Democratic Party's leadership was pessimistic about the election. The economy was going as well as it could go (given the ongoing American Depression), but international tensions were running high, and the LDP had been in office for over twenty two years and would be seeking ninth term in office. The Marshall Government would face a Labor Party led by Julia Gillard. The LDP campaigned on their economic performance, and their strength on national security issues. The LDP pushed the theme of trust and experience, while Labor argued for change and engagement with Australia's neighbours. The LDP managed to successfully attack Labor's economic platform, and attempted to portray Labor as "appeasers". One LDP electoral advertisement consisted of a montage of the Santa Cruz Massacre in East Timor, interspersed with Gillard promising to "negotiate" a "compromise" with Indonesia.

The 2012 election took place on December 8 2012 was a decisive victory for the LDP, with the party winning 103 seats in the lower house, plus 38 Senate seats.

Vietnam Returns from the ColdEdit

The collapse of the US dollar affected Asia's economies in different ways. Vietnam had become highly dependent on US trade and investment. Most Vietnamese trade, from the mid-1990s on, was denominated in dollars. The dollar collapse had devastated Vietnam's economy. Vietnam's economic difficulties led to rises in food prices, fuel shortages, and sudden increases in unemployment. The regime in Hanoi was at a loss to solve the problems. The government started to work on a regional trade deal with major Asian economies, and announced a rigorous austerity preogram. From an economic perspective, the Vietnamese government's response may well have been correct, however they failed politically. Their political failures led to demonstrations in mid October. The opening of Vietnam to foreign investors also opened the country to journalists. Images of demonstrations in Ho Chi Minh City, Hanoi, Haiphong, and Saigon were beamed throughout the world. The demonstrators called for a better economic future, and democracy. For the first time since 1975, the people of Vietnam were publicly telling their rulers that socialism had failed. The Vietnamese leadership called for restraint from all, and asked for a chance to work through Vietnam's problems, but the people had stopped listening. There had been talk in Hanoi of a "Tiananmen solution", especially among the military leadership. Any speculation about military involvement in the demonstrations was quashed. Prime Minister Nguyễn Tấn Dũng said that while the demonstrations remained peaceful, the Vietnamese People's Army would stay out. Dũng was conscious of the fact that "tanks in the street" would scupper the trade deals he would need.

Left unchecked, the demonstrators had attained "peaceful control" of some of the largest cities in Vietnam by the end of the first week. The Army was ordered not to move on them, and the police, with their inferior weapons, dared not move. As the demonstrations entered their second week, the cries for democracy became more explicit. International pressure on Hanoi increased, as the Japanese government said "The Vietnam government's response to the protests will influence the policy of Japan." During the nineties, foreign governments could choose whether or not they would be influenced by images like the 2012 Vietnamese demonstrations, but the rise of social media in the early 21st century made the Vietnamese demonstrators impossible to ignore. In addition to Japan, Australia, Malaysia, the US and most of Europe called on the Vietnamese government to negotiate with the protesters. In the third week, the demonstrators displayed home-made South Vietnamese flags. Exactly why the protesters chose the flag of South Vietnam isn't known, however it did demonstrate one thing: that the Vietnamese were no longer afraid of the Communists.

After the third week, Prime Minister Nguyễn Tấn Dũng offered his resignation, however this failed to halt the demonstrations. Having forced a Prime Minister out, the demonstrators aimed at General Secretary Nguyễn Phú Trọng, the de facto ruler of Vietnam. After another week of demonstrations, the Vietnamese economy was beginning to 'seize up'. Investment was falling dramatically, and Japan and the Asian Development Bank announced the suspension of economic aid to Vietnam. General Secretary Trọng considered calling in the Army, but his political officers advised him that the troops in general sympathised with the demonstrators. With all military, economic, and police solutions rendered impossible, the Vietnamese government had to turn to politics. General Secretary Trọng announced his resignation. A caretaker government of senior civil servants was formed to administer the country for three months, at which time elections would be organised. The Communist Party explicitly surrendered its monopoly on power, a monopoly it had held since 1954 in the north and 1975 in the south.

A democratic government, led by the new "Democratic Party of Vietnam" was sworn in shortly before Tet 2013. It was recognised by most of the world, including China. Vietnam (now calling itself the Republic of Vietnam) prepared to draft a new constitution with protections for democratic governance and human rights. The economy was buoyed by increased investment, and an influx of Vietnamese former-refugees, particularly from the United States. The new government also received military assistance including retraining. Most notably, the Australian Army "reactivated" the "Australian Army Training Team - Vietnam". They would teach the new Army of the Republic of Vietnam to be the apolitical executors of the policy of the government of the day. Vietnam's commitment to human rights at home was matched by its vocal defence of human rights abroad. ASEAN had tended to be silent on the subjects of human rights and democracy. This was particularly favourable to Burma, Indonesia, and (before the 2012 revolution, Vietnam). Vietnam now spoke up on human rights in all international forums, including ASEAN. Vietnam was invited to join the Asia-Pacific Security Economic group. While Vietnam's relations with the western and democratic nations had greatly improved, its relationship to China and Indonesia suffered. Vietnam had rescinded its recognition of East Timor as an Indonesian province. The coming of democracy to Vietnam increaed Indonesia's international isolation.

A Radical Man for Radical TimesEdit

The 2012 US Presidential Election was tipped to be the most contentious election in recent history. The collapse of the dollar led to frenzied activity from all parts of the political spectrum, each seeking to say that its opponents were to blame for the crisis, and that it held the solution. This election would see a larger than normal number of third party candidates. In the Democratic primaries, the contenders included the incumbent President, Barack Obama, Bernard Sanders, Dennis Kucinich, and Hillary Rodham Clinton. The media held the view that Obama and Clinton would be the front runners. In the Republican primaries, the major contenders included Michele Bachman, Herman Cain, and Governor Colin Amherst of Maryland.

During the primaries, the Democratic National Committee took note of the fact that people like Sanders and Kucinich were far more popular than socialists had been in the past. Sanders and Kucinich advocated radical solutions to the US's economic problems, with outright nationalisation of parts of the economy, and the outright replacement of the Federal Reserve System with a national central bank and US notes. The DNC had planned for Obama to be renominated, however they feared the rise of the "independent socialists". Given the popularity of Sanders and Kucinich, the DNC decided to dump Obama in the primaries. Thus, the Democratic ticket for 2012 was Hillary Clinton for President and Howard Dean for Vice-President.

For the Republican National Commitee, the choice came down to policy differences. Most commentators believed that the 2012 Presidential Election was highly likely to result in a Republican victory, but that a Republican victory would depend very much on the candidate chosen. The three main contenders had fairly well defined plans, with Michele Bachman taking on most of the policies of the Tea party movement, Herman Cain putting forward his 9-9-9 plan, and Colin Amherst launching his "Rebuild-Reunite-Reform" plan. Amherst's success as Governor of Maryland, particularly in the fiscal and economic field, gave him a lead over the other two candidates. Amherst managed to win the Republican nomination, with Governor Jon Huntsman as his running mate.

The campaign was fought at a high pitch but on election day, the results rapidly became clear, with Colin Amherst winning a landslide victory. Shortly after his inauguration in 2013, Amherst began a program of radical reform, including a new gold-backed dollar, massive reductions in government spending, decriminalisation of marijuana, massive deregulation of the economy, and a lowering of the tariff wall. On the foreign policy and security front, Amherst pledged to rebuild US military power and support traditional US allies.

Australian Prime Minister Marshall took an immediate liking to the new President. Marshall phoned Amherst shortly after his election, and suggested they meet to discuss matters of mutual importance. Marshall could not be sure about whether or not the Americans knew Australia's biggest secret, that Australia now possessed the bomb, and Marshall certainly wasn't going to reveal it. Marshall wanted to discuss trade, Indonesia (and East Timor), and China, and the final reconciliation between the US and Vietnam. He also wanted to better judge the new President. He promised to bring the United States back to a position of being a global superpower, and Marshall needed to assess him, and the state of the United States. The visit was to happen early in Amherst's administration, in March 2013.

Amherst and Marshall found themselves agreeable on most matters of trade and foreign policy. Marshall asked President Amherst to impose trade sanctions against Indonesia. Amherst agreed immediately, and also offered to seize Indonesian assets. The primary trading relationship affected was the end of US purchase of oil from Indonesia (particularly from Sumatra). Amherst also revealed to Marshall that he knew that Australia had nuclear weapons, and he undertook to keep it secret. He said that revealing this would undermine Australia's position as the preeminent regional power. On Defence, Amherst pledged to go to Congress to change the law banning export of the F-22 Raptor. He had a good chance of success, in that the US needed currency desperately, and the wind-down of the US military presence abroad made the upgrading of the equipment of America's allies more urgent. Amherst revealed his plan to contain China with Russian cooperation. The plan was to involve a withdrawal of the US military presence in Europe to gain Russian cooperation in containing China.

War clouds gatherEdit

In a joint press conference, Prime Minister Marshall and President Amherst announced the seizure of Indonesian assets and the imposition of trade sanctions against Indonesia. The announcement provoked condemnation from Jakarta, and the GOLKAR Triumvirate began to negotiate with China, North Korea, and Iran to form a a new economic and security alliance. A month later, the "Friendship Pact" was expanded to include North Korea and Iran. Iran and China provided new arms to Indonesia, including fighter aircraft. The death by natural causes of B.J. Habibie led to fresh elections for the Indonesian People's Consultative Assembly (Indonesian: Majelis Permusyawaratan Rakyat, MPR). The elections were, as always, rigged in favour of Golkar. In particular, the military faction (or "A Faction") was favoured. After the elections, the MPR elected Wiranto as President in his own right.

After the announcement of US sanctions, and the election of General Wiranto, Asian and Global markets began a sell off of Indonesia-related stocks and bonds, and of the Rupiah. Wiranto made a quiet request to China for financial and military aid, and this was granted. Nevertheless, the Indonesian economy crashed. In an attempt to resolve the situation, Prime Minister Marshall and Foreign Minister Tony Abbott drafted a letter to General Wiranto. The letter recommended that East Timor immediately be given "special autonomy" within the Indonesian republic, and that within five years, there should be a referendum offering the choices of continued special autonomy or independence for East Timor. The letter promised Australian aid in economic recovery and reconstruction for both Indonesia and East Timor. The letter also promised the help of the Australian government in dealing with the international community. The Australian cabinet approved the letter, however some ministers warned that this might backfire. Marshall and Abbott were, however, at the peak of their foreign policy achievements, and pressed on. Wiranto decided to defy Australia, and read the letter in the MPR to the derisory laughter of the Golkar members. With the Chinese government helping to bankroll the Indonesian government, and the TNI, Wiranto thought he had little to worry about. He blamed Indonesia's economic problems on Australia. The tone of the Indonesian media was, according to some, becoming hysterical. The media in Indonesia was controlled by the government and used to whip up popular support against Australia.

Australia announced a new defence review. It had been in the works for sometime, but Jakarta saw its timing, and its content, as provocative. The Australian Government would stick with conscription for the time being, and that Australia would renew its Air Combat Force with the latest US hardware, including the F-22 Raptor and the F/A-18E/F Super Hornet. In response Indonesia announced the procurement of twenty four Shenyang J-11 fighters from China. The Shenyang J-11 is a Chinese-made version of the Russian Sukhoi Su-27. The deal fell through after US President Amherst's visit to Moscow to sign a Treaty of Cooperation and Non-Aggression between the US and Russia. After the treaty was ratified by the Russian Duma, the Russian Government (which has a majority stake in Sukhoi's parent company, United Aircraft Corporation) withdrew Shenyang's manufacturing licence, and ended export of key equipment to China. China had two options, back out of the deal with Indonesia, or hand its own aircraft over to Indonesia. Doing the latter would have been politically impossible given the new US-Russian agreement, so China backed out of the deal. Indonesia turned to North Korea again, this time to purchase the Taepodong-2 missile. This was kept secret, as the purchase was extremely costly (even though it was paid largely in kind), and it was also a destablising influence. From Indonesia, the Taepodong-2 could hit Australian cities as far away as Hobart or Auckland. Australian intelligence discovered the purchase, and advised it's allies.

The ship was intercepted by the Japan Coast Guard, and the story of the "missile bust" (as the media called it) went out all over the Pacific, humiliating North Korea and Indonesia. The Indonesian missile threat had raised the stakes. The Australian Government had already decided to reinforce its military presence in the north of Australia. Australia moved several warships, a brigade of troops, and two Air Force fighter squadrons (plus support aircraft) to the north of Australia. Indonesia also commenced a military buildup, bringing extra troops into West Papua (which borders the Australian state of Papua New Guinea), and East Timor. The Australians concluded that Indonesia would probably try to get its missiles again, a conclusion which ASIS (Australia's foreign intelligence agency) supported. Prime Minister Marshall called a summit conference in Canberra with Australia's closest Pacific allies. After the conference, the governments of Australia, the US, Japan, and Vietnam made a joint statement that Indonesia should destroy its ballistic missile arsenal, and withdraw from East Timor. They also announced their recognition of an East Timorese "Government in Exile" based in Darwin. The Australians and their allies calculated that since Indonesia was now isolated, it would succumb to pressure in the way that South Africa did up to and during the end of Apartheid. They did not believe that Wiranto's "blustering" rhetoric was serious. The fallacy of this view was shown when Wiranto quite blatantly sent large TNI reinforcements into East Timor. The new troops immediately began a new bloody campaign against the FALINTIL insurgency. In response, Australia declared Indonesia's actions in East Timor to be genocide. Australia's key allies joined in this declaration. In addition, Australia recognised an East Timorese government-in-exile, based in Darwin. The aim of this government-in-exile was to secure the independence of East Timor. It was dominated by FRETILIN, and was led by 'President' Xanana Gusmao.

Wiranto was outraged. He ordered the TNI to go on high alert, and dispersed his ballistic missiles to launch areas. He then gave the Australian government an ultimatum: either Australia ceased its "interference" in Indonesian "internal affairs", or Indonesia would use force against Australia. Australia was given one week to comply. Wiranto gambled that Australia would not sacrifice the lives of its own in order to protect the East Timorese. In truth, a large section of Australian public opinion was quite prepared to see the Australian Defence Force used to help to liberate East Timor. The Wiranto regime had also come to be seen as a direct threat to the security of Australia. It was suspected of supporting the Bougainville Resistance Army (which was true), and of supporting Jihadist terrorist groups in Australia (which was false). Australia decided to defy the Indonesian ultimatum.

The Rocket's Red GlareEdit

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