New Zealand's Diplomatic Setbacks in the Pacific Islands

New Zealand-Kiribati-Cook Islands; UK-Australia; India Defense Spending; Australia and Japan in the US

Feb 12, 2025

Hub Story: New Zealand's Diplomatic Setbacks in the Pacific Islands
Spoke Story: United Kingdom-Australia Defense and Security Cooperation Agreement
Spoke Story: India Increases Defense Spending
Spoke Story: Australia and Japan Visit Washington
Alliance Insights: Key Articles This Week

Spoke Story: New Zealand's Diplomatic Setbacks in the Pacific Islands

In the past week, New Zealand has faced two significant diplomatic challenges with its Pacific Island neighbors, raising critical concerns about regional stability and security. These developments underscore the growing geopolitical complexities in the Pacific, particularly amid escalating competition between China and Western powers for influence in the region.

A diplomatic dispute between New Zealand and Kiribati has raised concerns about the growing influence of China in the Pacific region. The dispute began when New Zealand's government announced it was reviewing aid to Kiribati after its president canceled a planned meeting with a New Zealand delegation. This has put Kiribati, a strategically significant but vulnerable nation, under the spotlight as it faces threats from climate change. Kiribati has pivoted toward China in recent years, notably switching diplomatic allegiance from Taiwan to China in 2019, while Western nations like New Zealand, Australia, and the US have struggled to maintain influence. With the region increasingly caught in the rivalry between China and the West, concerns are growing that Kiribati may turn further toward Beijing, especially as US aid and engagement in the Pacific face challenges.

New Zealand has expressed renewed concern over the Cook Islands' Prime Minister Mark Brown's upcoming trip to China to sign agreements, citing a lack of transparency and consultation despite the two nations' constitutional ties. New Zealand expects to be informed about the details of any agreements involving defense and security, given their constitutional arrangements. The Cook Islands, a self-governing nation in free association with New Zealand, has not fully consulted Wellington on the proposed partnership with China, which involves infrastructure, trade, and economic development. While China views the Cook Islands as an important partner, New Zealand officials and opposition leaders in the Cook Islands have raised concerns about the secrecy surrounding the agreements, urging more transparency in the decision-making process.

Climate change mitigation is a central priority for Pacific Island nations in shaping their security agendas. Alongside this, development, infrastructure, and economic aid play crucial roles in strengthening their resilience and addressing security challenges. The 2018 Pacific Islands Forum Boe Declaration on Regional Security underscores the region's deep concern over these interconnected issues.

Pacific Islands Forum: Boe Declaration Action Plan

The Boe Declaration is a call to action for stronger and cohesive regional security cooperation and coordination through the assertion of our collective will and collective voice as peoples of the Pacific.
It recognises that climate change remains the single greatest threat to the livelihoods, security, and wellbeing of the peoples of the Pacific. It further recognises that the Pacific is faced with a regional security environment confronted with complex security challenges framed by an expanded concept of security, within a dynamic geopolitical environment.
The Boe Declaration affirms a revitalised approach to addressing regional security moving away from a narrow or traditional notion of security to an expanded concept of security. This expanded concept of security reaffirms the regions commitment to address emerging and contemporary security issues which directly impact upon the wellbeing of Pacific peoples.

While the United States maintains diplomatic engagement in the Pacific Islands region, it frequently depends on Australia and New Zealand to lead efforts in keeping many of these nations aligned with the West. New Zealand, in particular, has long-standing, strong relationships with these island nations, making its current challenges with Kiribati and the Cook Islands especially concerning. New Zealand’s white papers further highlight the alignment between its security priorities and those of the Pacific Island nations, underscoring the importance of maintaining this cooperative approach.

New Zealand Defence Ministry: Defence Policy and Strategy Statement 2023

New Zealand’s approach is informed by Pacific Island countries’ priorities in working to address underlying drivers of insecurity in the Pacific and supporting the resilience of the region against security challenges and threats. This includes the priorities set out in the Boe Declaration and the Pacific Island Forum’s 2050 Strategy for the Blue Pacific Continent. Alongside other agencies, Defence will work with Pacific partners to build collective regional resilience and reinforce desired norms and practices. This includes, for example, working with Pacific partners to build overall regional capacity, supporting shared awareness of activities in our region, and deterring actions contrary to our shared interests.

In pursuit of these relationships, New Zealand puts a high priority on coordination with Australia. The importance of this relationship is so important that when New Zealand created its foreign policy white paper, its Pacific focus area almost exclusively talked about New Zealand-Australia cooperation.

New Zealand Foreign Affairs and Trade Ministry: Strategic Intentions 2024-2028

Partnering for the Pacific:
The Pacific is increasingly contested and complex. Alongside Australia, we have a non-discretionary interest in supporting the resilience of Pacific countries to address short and long-term challenges, including those related to climate change, security, human development, and economic prosperity.
Australia is our indispensable partner in this work. Working together, we can contribute at scale and speed, and in ways that directly address the needs and priorities of our Pacific partners…
The Ministry will focus extra effort into achieving these objectives:
Objective One: Enhanced coordination and knowledge management within the Ministry and New Zealand Government to give transparency, visibility, and coherence to how we interact with Australia on Pacific issues.
Objective Two: More structured engagement with Australia on Pacific issues, drawing on our respective strengths.
Objective Three: Increased opportunities to work with Australia, in the region and in multilateral settings, in support of Pacific priorities.

For New Zealand, the Kiribati case is familiar. Australia has struggled to make inroads with the Pacific island nation as Kiribati balances China and the United States. The Cook Islands story is much more concerning. The Cook Islands is in a constitutional free association with New Zealand. Under the free association arrangement, the Cook Islands and New Zealand are expected to consult each other on external affairs and defense.

Cook Islands Constitution Act 1964

External affairs and defence
Nothing in this Act or in the Constitution shall affect the responsibilities of Her Majesty the Queen in right of New Zealand for the external affairs and defence of the Cook Islands, those responsibilities to be discharged after consultation by the Prime Minister of New Zealand with the Premier of the Cook Islands.

If Cook Islands does move forward to sign a new comprehensive strategic partnership with China, New Zealand will probably demand details about the arrangement. The recent diplomatic challenges New Zealand faces with Kiribati and the Cook Islands highlight critical implications for US policy in the Pacific. As New Zealand grapples with increasing Chinese influence in these nations, especially in the context of strategic partnerships and climate change security, the US must reassess its reliance on regional allies to maintain influence. Given New Zealand’s key role in supporting Pacific resilience and security, the US risks losing ground if its partners, like New Zealand, struggle to engage effectively with Pacific Island nations that are increasingly drawn to Beijing’s influence.

Spoke Story: United Kingdom-Australia Defense and Security Cooperation Agreement

The recently released UK-Australia Defence and Security Cooperation Agreement outlines key areas of collaboration aimed at strengthening mutual defense and security. Although signed in 2024, the agreement still requires approval from both countries' respective parliaments. While AUKUS serves as the catalyst for enhanced defense cooperation, the agreement's language reflects a much broader and more comprehensive security agenda between the two nations.

This agreement outlines various areas of cooperation between the parties, focusing on defense and security. These efforts aim to strengthen their partnership and capacity for joint operations, while also addressing evolving global challenges. Key areas of cooperation include:

Peacekeeping and Military Operations: The parties will work together to sustain their capacity for peacekeeping and military operations, particularly those conducted under international frameworks like the United Nations, NATO, or other coalitions. "The Parties shall cooperate to build a long-term mutually beneficial partnership in defence and security."
Multilateral Security Mechanisms: Cooperation will extend to multilateral security mechanisms such as the Five Power Defence Arrangements (FPDA) and the Air and Space Interoperability Council. Regular reviews of these mechanisms will ensure their ongoing relevance to current security needs.
Advanced Defence Capabilities and Technology: The agreement emphasizes cooperation in cutting-edge defense technologies, including participation in the AUKUS trilateral security partnership. This will cover areas like nuclear-powered submarines, cyber defense, AI, electronic warfare, and emerging technologies like hypersonic and quantum technologies.
Information Sharing and Strategic Dialogue: The parties will exchange defense information, particularly regarding capabilities and operations, in line with their national security laws. They will also engage in strategic discussions on mutual interests, including sharing documents and conducting candid dialogues.
Cybersecurity, Space, and Climate Security: The agreement recognizes the importance of cybersecurity, space domain awareness, and climate security. It calls for continued collaboration in these areas, including working together in multilateral forums to address shared challenges.
Humanitarian Assistance and Disaster Relief: Both parties will cooperate in providing humanitarian assistance and disaster relief, responding to natural disasters or other crises where their capabilities can support affected regions.
Military Personnel Exchanges and Training: To enhance interoperability, there will be ongoing exchanges of military and civilian personnel. These exchanges will support training, education, and personnel development, fostering integration between the parties’ forces.
Logistics and Industrial Cooperation: Practical cooperation will be strengthened through joint and multilateral exercises, logistical activities, and the sharing of defense procurement information. The agreement also highlights collaboration in defense science and technology, as well as testing and evaluating defense capabilities.
Maritime and Emerging Security Issues: Maritime security is a key area of cooperation, along with exploring new defense fields that may emerge. The parties are committed to working together in these areas, including sharing information and participating in relevant multilateral forums.

This agreement encapsulates a comprehensive and evolving partnership aimed at enhancing defense capabilities, responding to global challenges, and ensuring mutual security interests are met. It underscores a commitment to long-term collaboration across various sectors of defense, technology, and international cooperation.

The agreement also includes a Status of Forces Agreement and outlines the responsibilities and procedures related to the presence of a Visiting Force in a host state, focusing on legal, operational, and logistical aspects. Key points include:

Respect for Local Laws: Members of a Visiting Force, its Civilian Component, and Dependants must respect the laws and regulations of the Receiving State, with provisions for disciplinary actions by the Sending State and cooperation on criminal jurisdiction.
Jurisdiction and Disciplinary Matters: The agreement establishes a framework for jurisdictional authority over members of a Visiting Force, covering both criminal and disciplinary actions, with details on how concurrent jurisdiction cases are handled between the Sending and Receiving States.
Logistics and Cooperation: The agreement includes provisions on the entry and exit of personnel, the importation of goods and equipment, security, communications, and medical treatment, ensuring smooth cooperation and compliance with local laws. It also covers environmental protection, accident investigations, and the handling of deceased members of the Visiting Force.

This framework ensures clarity in the legal status, operational protocols, and mutual responsibilities between the Sending and Receiving States. The agreement is a great advancement for AUKUS, but also demonstrates how initiatives like AUKUS can engender deeper cooperation.

Spoke Story: India Increases Defense Spending

India has proposed a 9.5 percent increase in its defense budget for the 2025-26 fiscal year, reaching approximately $78.7 billion, with a significant portion directed toward wages and pensions rather than new military acquisitions. While about $54.2 billion is allocated to manpower costs, the capital outlay for modernization and procurement is set at $20.8 billion, a 4.6% increase from the previous year, but still insufficient to counter China’s military advancements. Analysts are concerned that the slow pace of defense deals and procurement could hinder India’s military modernization efforts, despite the higher budget allocation.

Breaking Defense: Indian defense budget boosted 9.5%, but analysts say pensions hindering weapons spending

According to analyst Neelanjana Banerjee, the budget breaks down like this:
India Defense Budget:
Total: 681,210 crore (USD $78.8 billion), a 9.53% increase
Defense pensions: 160,795 crore ($18.6 billion), a 14% increase.
Capital expenditure: 180,000 crore ($20.8 billion), a 5% increase
Revenue expenditure: INR 311,732 crore ($36 billion), a 10% increase.
Key Weapons Spending:
Aircraft & aircraft engines: 48,614 crore rupees ($5.6 billion)
Other Equipment: 63,099 crore rupees ($7.3 billion)
Navy: 24,391 crore rupees ($2.8 billion)

To both Trump and Biden, India has played a core component to Washington’s Indo-Pacific strategy. Trump officials have done early indications that they plan on maintaining close US-India ties. On Trump’s inauguration day, Secretary of State Marco Rubio held a Quad Ministerial Meeting. Additionally, Secretary of Defense Pete Hegseth’s phone call with Indian defense minister showed early hints at more cooperation, with an expected comprehensive defense framework in progress. Trump’s recent tariffs will hit India hard. Modi’s visit to Washington soon could help alleviate some of the hurt if they give enough concessions to ameliorate the White House.

Reuters: India's Modi to Meet Trump with Planned Tariff Concessions

As well as discussing tariffs with Trump, India is open to discussing a possible mini trade deal, two government officials said.
Modi's early visit aims to avoid a "trade war-like situation that is happening between the United States and China," a third official said…
India's budget this month cut average import tariff rates to 11% from 13% on several items, besides reducing taxes on high-end bikes and luxury cars. India is also reviewing surcharges on more than 30 items, including luxury cars and solar cells.
Nearly a fifth of India's exports of engineering goods — comprising steel and aluminum and worth about $25 billion — are at risk if Trump adopts the proposed 25% tariff, an official of an industry body said.

A recent War on the Rocks article by Sameer Lalwani and Vikram J. Singh highlighted some key areas for advancing US-India security cooperation.

War on the Rocks: How to Get the Most Out of the U.S.-Indian Defense Partnership

Defense Technology
The White House can also encourage India to reform its procurement process, fix its inverted tariff structure, and support Indian private sector partnerships with the U.S. defense industry for rapid scaling of capabilities. India could also reprioritize its defense dollars — of its latest $78 billion defense budget, we estimate only 20 percent will go to capital acquisitions. In its first few months, the new administration should also demonstrate its intention to accelerate approvals and licensing for U.S. exports to trusted allies and partners, and reform the export control community. India, for its part, should propose ways to harmonize its own technology security and export control mechanisms with those of the United States, which will continue to have concerns about cybersecurity and intelligence collection efforts by Russia…
Military Operational Cooperation
Beyond increasing the number of military exercises, the United States and India can also enhance the quality of military exercises by conducting them with more advanced and/or diverse assets, under more complex conditions, and moving up the conflict spectrum from disaster relief to combat exercises. Exercises should also expand in advanced domains like undersea and space domain awareness. India should send a large, high-level participant delegation to Space Command’s Global Sentinel Exercise, and get on a path to join the Schriever Wargame which brings partners together to plan for space operations…
Institutional Architecture: U.S.-Indian Bilateral Defense Framework
The first challenge is to modernize the framework to account for contemporary problem sets, efforts, and priorities. The fact that the last defense framework, signed in 2015, does not mention the words “China,” “Indo-Pacific,” “deterrence,” “competition,” “interoperability,” or even “threat,” serves as a reminder that this document was written in a completely different era…
A second reform requires integrating foreign affairs and national security council representatives into the Defense Policy Group framework to offer a wider strategic perspective, geopolitical depth, and coordination to the two defense agencies.

Spoke Story: Australia and Japan Visit Washington

This past week, US Defense Secretary Pete Hegseth and Australian Defense Minister Richard Marles met to discuss shared defense priorities and the progress of the AUKUS security agreement, which includes Australia acquiring US Virginia-class submarines and investing in the US submarine industrial base. The agreement strengthens joint capabilities and enhances defense collaboration between the US and Australia in the Indo-Pacific, with Australia contributing $500 million toward a $3 billion investment in the US defense sector.

Additionally, Japanese Prime Minister Shigeru Ishiba made a trip to Washington to meet with President Donald Trump, aiming to build a personal connection and reinforce the US-Japan alliance. The two leaders discussed shared concerns, including China's growing influence in the Pacific and North Korea's nuclear threat, with Ishiba emphasizing Japan’s commitment to defense spending and its investment in US manufacturing. Ishiba also prepped for potential discussions on Nippon Steel's $14.1 billion acquisition of US Steel and the future of US-Japan cooperation on AI and defense technologies.

Hegseth’s comments proved very favorable for AUKUS.

Australian Defence Ministry: Opening Remarks, Meeting with US Secretary of Defense

SECRETARY HEGSETH: The President is very aware, supportive of AUKUS, recognises the importance of the defence industrial base, which the Deputy Prime Minister pointed out the investment Australia is willing to make. It enhances our ability in the subterranean space, but also our allies and partners. This is not a mission, in the Indo-Pacific, that America can undertake by itself. It has to be robust allies and partners. Technology sharing and subs are a huge part of it. So he’s aware and appreciative for his support and leadership on that topic.
JOURNALIST: Secretary, will you deliver Australia’s first nuclear submarine on time?
SECRETARY HEGSETH: We sure hope so. Part of what President Trump is committed to doing is cutting red tape, investing in the defence industrial base, ensuring that we stand by our allies and partners. I think that’s something that was missing in the last four years, that President Trump demonstrated – you’re going to have no worse enemy, and no better ally. And that’s what he’s charged me with at the Defense Department, is when we make these strategic partnerships and we invest in them, and there’s skin in the game, as the Deputy Prime Minister pointed out, we’re going to do everything possible we can to help deliver on that.

Ishiba’s meeting with Trump went well and demonstrated that the relationship will be core to US defense strategy. The joint statement is summarize below:

US-Japan Cooperation for Peace and Security
The meeting between President Trump and Prime Minister Ishiba focused on strengthening US-Japan cooperation for peace and security, with both leaders reaffirming their commitment to the US-Japan Treaty of Mutual Cooperation and Security. They discussed enhancing bilateral defense capabilities, including improving command and control frameworks, increasing presence in Japan's Southwest Islands, and deepening collaboration on defense equipment, technology, and cybersecurity. The leaders also emphasized the importance of US defense commitments to Japan, including the application of nuclear capabilities, and expressed strong opposition to any efforts to undermine Japan's peaceful administration of the Senkaku Islands.

US-Japan Cooperation for Growth and Prosperity
On the economic front, the leaders committed to expanding bilateral cooperation, focusing on cutting-edge technologies such as AI, quantum computing, and semiconductors, while also addressing economic coercion and strengthening supply chains. They also aimed to enhance energy security through increased US natural gas exports to Japan and to collaborate on nuclear technologies, including small modular reactors. Their discussions emphasized creating high-quality jobs and elevating economic ties, with both countries aiming to foster investment and cooperation in critical areas.

US-Japan Coordination in the Indo-Pacific
In terms of regional cooperation, both leaders affirmed their shared commitment to a free and open Indo-Pacific, bolstering multilateral partnerships like the Quad and trilateral relations with countries such as South Korea and Australia. They reiterated their opposition to China’s aggressive territorial claims in the East and South China Seas, expressed support for Taiwan’s peaceful resolution of cross-Strait issues, and addressed concerns over North Korea’s nuclear program and military ties with Russia.

A key measure of the relationship’s strength will be Ishiba’s ability to increase Japanese defense spending and navigate the trade pressures from Trump. These dynamics were analyzed in a recent article by Hudson Institute experts William Chou and Masashi Murano.

Hudson Institute: A Good First Step: Analyzing the Trump-Ishiba Summit

Tokyo will need to increase its defense spending to support these avenues of cooperation. The joint statement referenced Japan’s efforts “to fundamentally reinforce its defense capabilities beyond [fiscal year] 2027.” This was a politically sophisticated way to affirm Japan’s defense expansion without specifying a percentage target. The mention of 2027 was a recognition of Japan’s 2022 Defense Building Program, which set a goal of spending 2 percent of gross domestic product on defense by 2027. The statement’s more ambiguous phrasing seems to acknowledge that the yen’s weakness has limited Japan’s purchasing power. Costs of both domestic and American equipment have increased by 20 to 60 percent compared to previous estimates. Therefore, even if Japan reaches the 2 percent target by 2027, it will fall short of the projected defense capabilities it set out in 2022. The statement’s language allows the Japanese government to make the case to voters that higher defense spending—perhaps 3 percent of GDP—may be necessary…
Given his consistent emphasis on addressing American trade imbalances, it was unsurprising that Trump remained committed to resolving Japan’s $68.5 billion trade surplus with the United States. It is worth noting that the Japanese surplus has decreased from 65.5 percent of US-Japan trade in 1991 to just 6.7 percent in 2023. That figure, along with Ishiba’s promises to expand Japanese investments in the US and purchases of American energy, likely figured in the president’s confidence that the bilateral trade issue could be handled without resorting to flat tariffs—the prime minister’s primary economic objective of this trip.

Ultimately, these meetings should be taken as a good sign. These meetings reflect a strong commitment from the US, Australia, and Japan to enhance defense collaboration, economic ties, and regional stability. As the Indo-Pacific becomes an increasingly complex security environment, these partnerships are crucial for countering growing threats from China and North Korea. Moving forward, the success of these initiatives will depend on how well the nations address trade imbalances, strengthen defense capabilities, and foster technological innovation.

Alliance Insights: Key Articles This Week

Japan:

Taiwan:

South Korea:

India:

The Philippines:

Europe:

Britain’s World: Carrier strike groups: The European commitment to the Indo-Pacific

United States:

Breaking Defense: Twin political paths President Trump can take to ensure nuclear deterrence

US Indo-Pacific Command:

Hub-and-Spokes

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