No country can be prosperous without engaging the world, but just as we are mindful about who we let into our own homes, we should consider that not all foreign engagement is welcome. That’s why sovereign states need to come to grips with authoritarian regimes using sub-national relationships to undermine national unity.
Being resilient to the exploitative proposals of foreign governments requires tools that simultaneously enable and constrain the ability of sub-national actors, such as state governments and universities, to join forces with overseas regimes that are likely to have more power and resources and ulterior motives. Australia has such tools.
Australia’s Foreign Arrangements Scheme, created in 2020 following the shock of Victoria signing onto the Chinese Communist Party’s Belt and Road Initiative, is one. Based on the inseparability of domestic and global affairs, it ensures commonality of purpose between local and national interests. It is a mechanism that nations worldwide, particularly those with federal and highly decentralised systems, should imitate.
Democracies, in particular, have often viewed international affairs as an offshore matter. Australia’s foreign policy, for example, is imagined as Canberra meeting the world. But a review of the Foreign Arrangements Scheme by Rosemary Huxtable has confirmed that the distinction between ‘foreign’ and ‘domestic’ no longer holds. State governments, local councils and universities are all global actors. Through them, foreign states can shape Australia’s choices.
We do so much to teach our kids about stranger danger, but too often as adults in charge of local councils, universities and state governments, we’re naive. The allure of trips, trinkets and titles blinds the true purpose of a foreign government proposal. The foreign policy implications of sub-national actions can be just as consequential as decisions taken by the Australian government’s National Security Committee of Cabinet.
When a Chinese company, unavoidably under the thumb of the CCP, seeks to control critical infrastructure in Darwin, when a local council signs a sister-city pact with a local government of an authoritarian regime, or when an Australian university partners with a research institute tied to dual-use programs—in all these cases there are implications for Australia’s defence posture, technology security and economic resilience. Nor is this unique to Australia: Japanese prefectures have struck energy and investment deals with foreign governments, and US state governors’ frequent foreign trips to court trade and investment sometimes cut across federal foreign policy.
Australia’s need for a consistent process of due diligence for reviewing nationwide arrangements with foreign governments and their proxies has been revealed by the scale of the interaction: in just the four years since the Foreign Arrangements Scheme was created, the administering department, Foreign Affairs and Trade, has received more than 20,000 notifications about foreign arrangements.
On 1 September the government published Huxtable’s review and its own response. It has accepted the recommendations to strengthen the scheme. Most importantly, by broadening the test of arrangements to explicitly include the national interest—including national and economic security—and by formalising coordination across intelligence and economic agencies, the revised scheme will ensure that the national interest is front and centre. This addresses the previous vulnerability that too often sub-national partnerships have been struck for short-term opportunity or goodwill without sufficient regard for strategic risks.
The reach of the Department of Foreign Affairs and Trade in this regard is unusual. Few foreign ministries are mandated to scrutinise and, where necessary, veto subnational agreements with foreign entities. And it is this unique role that has made the Foreign Arrangements Scheme such a critical tool for Australia, and a model for others to draw from.
Other countries—particularly those with which we have shared security interests, including our AUKUS partners—should mirror Australia’s principle that even the most localised initiative should not be inconsistent with the broader national interest. Australia and the United States for example can find common ground and share lessons, consistent with President Donald Trump’s America First Policy Directive to Secretary of State Marco Rubio that US foreign policy will ‘champion core American interests’ and Rubio’s commitment that ‘programs that are misaligned with America’s core interests will cease to exist.’
One such lesson is that building national resilience is not the job of a single ministry. Australia’s Foreign Arrangements Scheme now sits centrally as part of a latticework of safeguards that cut across portfolios and ministers, each playing a distinct role in shoring up Australia’s resilience.
The Foreign Acquisitions and Takeovers Act, administered by the Treasury, is a gatekeeper for foreign investment decisions, ensuring that ownership and control of strategic assets are consistent with the national interest. The Security of Critical Infrastructure Act, managed by the Department of Home Affairs, protects our most sensitive national assets from undue foreign control. The Commonwealth Electoral Act, which rests with the Special Minister of State and the Department of Finance—with the Australian Electoral Commission as the independent operator—helps shield the democratic process from foreign interference. The Defence Trade Controls Act, led by Defence, regulates sensitive technology transfers and ensures Australia’s defence innovations are not diverted to hostile uses.
The interconnection is crucial: no single law or minister can manage the complexity of foreign engagement in isolation. It is the combined effect that produces transparency and resilience across the system.
Vitally, this system-wide resilience means that while the role of the federal government is to lead and facilitate, all sectors must take responsibility for protecting the nation. Councils, universities and state governments are on the front line of foreign engagement and cannot abdicate their responsibilities. But they often lack resources to assess risk. So independent research tools are needed to help bridge that gap.
ASPI’s China Defence Universities Tracker, for instance, provides open-source analysis of Chinese universities and research institutes with links to Beijing’s security apparatus—and increasingly, to joint programs with Russian counterparts. ASPI’s research on the University of Liverpool’s partnerships exposed collaborations connected to China’s military and, through that, Russia’s defence ecosystem.
These present not merely hypothetical risks; they are live channels through which authoritarian states seek advantage. The US House Select Committee on the Chinese Communist Party drew on the universities tracker in a recent report that revealed how Pentagon-funded research had been channelled through partnerships with Chinese defence-linked universities, undermining the US’s technological edge.
For Australian universities, state governments and industry, such resources provide practical help to distinguish benign partnerships from those that compromise national security—ensuring responsibility for resilience is shared across the system. Resilience as a shared responsibility ultimately ensures Australia has the confidence to engage globally knowing that security and sovereignty remain at the centre of even the most local dealings.