The Biden Administration and New Zealand’s Strategic Options: Asymmetric Hedging, Tight Five Eyes Alignment, and Armed Neutrality

Abstract
New Zealand confronts a seemingly inescapable dilemma: its security interests link it to traditional partners – Australia and the US – while ties between these two and China, Wellington’s largest export market, are deteriorating. This article considers what this new era of competition means for New Zealand and assesses the risks, costs and benefits of three strategic options open to Wellington: (1) asymmetric hedge (the status quo), (2) tight Five Eyes alignments (hewing closer to traditional partners) and (3) armed neutrality (a bold proposition for greater self-reliance). It also addresses what the new Biden administration, which is portraying China to be a military and ideological threat to democracy and the international liberal rules-based order, means for New Zealand’s management of its ties between Washington and Beijing. Through its analysis, the article contributes to policy debates in New Zealand over its options and to the literature on small state alignments and hedging strategies.

Keywords: Small States, Great Power Competition, New Zealand, United States, Five Eyes, China, South Pacific, Indo Pacific, South Pacific, Hedging, Armed Neutrality, Shelter Theory, Biden Administration.

Download full PDF version – The Biden Administration and New Zealand’s Strategic Options: Asymmetric Hedging, Tight Five Eyes Alignment, and Armed Neutrality (553 KB)

Introduction
A new great power competition between China and the United States (US) – the world’s two largest economic and military powers – has commenced, as Beijing’s share of power relative to Washington’s grows. This heralds the end of American unipolarity and the onset of a more competitive and dangerous multipolar system.¹ As such, a multidimensional competition across the Indo Pacific is playing out, comprised of military balancing and counter-balancing, intense economic competition, new institutional arrangements, territorial disputes and a dash for military-technological advantage.

Washington, under both the former Trump administration (2017-2021) and new Biden administration (2017-present), is portraying China to be both a military and ideological threat to democracy and the international liberal rules-based order,² and has elevated great power competition to the forefront of US grand strategy.³ Meanwhile Australia (Wellington’s sole treaty ally) is engaged in a heated spat with China, and is following Washington’s lead (Washington and Canberra are both responding to China’s rise in a manner reminiscent of the Cold War, via adjustments and enhancements to their military forces, and by taking more assertive diplomatic positions). By contrast, New Zealand has generally preferred a relatively ‘discreet’ approach when it comes to voicing its differences with Beijing.⁴ Yet, Wellington’s position is becoming more complicated and precarious. Like many small states it faces a dilemma: its security interests are maintained through robust relationships with its traditional partners including the United Kingdom, US, Australia and Canada – five nations united through the Five Eyes (FVEY) intelligence arrangement, but its levels of trade are perceived to be dependent on China. However, outside of slight adjustments in recent years, New Zealand’s approach to balancing relations with China and its traditional partners is characterised by continuity: it employs an asymmetric hedge. In this, it does enough to ensure close security ties with traditional partners, but maintains a margin of distance on key issues to prevent China from imposing costs on New Zealand. Nevertheless, as US-China⁵ and US-Australia⁶ ties deteriorate, this balance is becoming harder to manage.

This article considers the choices Wellington has in respect to US-China (and to a lesser extent, China-Australian) rivalry, and what the Biden administration means for Wellington’s interests. It contributes to policy debates in New Zealand over its options and to the literature on small state strategic alignments and hedging strategies in the Indo Pacific.⁷ It asserts that there are ways for small states to escape their predicament, but these require significant and stark shifts of strategy, mind-set, and have their own risks and costs.

The article is divided into four parts. The first briefly surveys the small state literature and strategic options available to small states. The second outlines a spectrum of options available to New Zealand.8 This includes (1) sustaining the status quo characterised by an asymmetric hedge, and two alternatives: (2) a tighter alignment with traditional partners and (3) a bold proposition to escape the dilemma through armed neutrality. The risks, costs and benefits of each option are considered. The third part discusses what a Biden-era foreign policy will mean for New Zealand and its strategic options. The fourth and final section suggests there is a case for small states like New Zealand to enhance their resiliency and aspects of self-reliance in the face of a changing strategic environment.

Download full PDF version – The Biden Administration and New Zealand’s Strategic Options: Asymmetric Hedging, Tight Five Eyes Alignment, and Armed Neutrality (553 KB)