Australia has weathered economic coercion before. Beijing’s tariffs on wine and barley, informal bans on coal and lobster, and tightened import inspections weren’t just trade spats. They were deliberate, politically motivated measures designed to exploit vulnerabilities in our economy and pressure our government. Other examples—including Russia’s energy stranglehold on Europe, and China’s rare earths restrictions on Japan—remind us that global markets are now arenas of strategic contest.

There’s a growing temptation to call this ‘economic warfare’, but the phrase is double-edged. While it captures the seriousness of hostile economic measures, it also risks escalating rhetoric and locking governments into rigid postures. Australia must tread carefully: while coercion isn’t the same as war, if left unchallenged it can undermine sovereignty as effectively as armed conflict. The answer isn’t in semantics, but in coordination, led by the Department of the Prime Minister and Cabinet (PM&C).

Politically, PM&C has shifted over the past decade. Once seen primarily as the government’s central policy agency, its role has increasingly tilted toward whole-of-government coordination. It convenes interdepartmental processes, balances portfolios and ensures Cabinet receives integrated advice. This shift has merit: no single department owns the coercion problem, and coordination is essential. But coordination alone is not enough. Some national challenges—economic coercion chief among them—require central leadership, not just arbitration.

Currently, when approaching coercion, each department has a different focus: the Department of Foreign Affairs and Trade focuses on diplomacy; Defence on readiness, Treasury on fiscal and regulatory tools; and Home Affairs on resilience. Each perspective, while valid, is only one part of a bigger picture. Only PM&C can synthesise these perspectives into a coherent strategy and give the prime minister and Australia’s National Security Committee clear, actionable choices.

In a Strategist article ^[1], James Tennant proposed establishing a dedicated financial warfare office within Defence to respond to these challenges. His warning—that financial tools are now part of strategic competition—is well taken. But the solution he outlines risks entrenching a false narrative: that economic statecraft in peacetime is the same as logistics and mobilisation in wartime. The two are not interchangeable.

Mobilising resources for armed conflict is fundamentally different from countering coercive trade measures, sanctions, or cyber-enabled financial disruption. Conflating the two risks militarising what are essentially political and economic tools, undermining diplomacy, escalating rhetoric and distorting policy priorities. A Defence-led financial warfare office would inevitably narrow the lens, skewing responses towards military logic rather than diplomatic, regulatory and resilience-based approaches.

Defence must be at the table, warning about the strategic and readiness consequences of coercion. But establishing a financial warfare capability inside Defence, short of wartime mobilisation, would be ill advised. It could narrow the framing of coercion to military competition, sidelining diplomacy and economic tools. It could signal escalation unnecessarily, reinforcing adversary narratives. And it could undermine the credibility of civilian agencies that carry most of the response burden. Australia should resist the drift towards military-led answers for problems that demand civilian-led, whole-of-government solutions.

Home Affairs is pivotal in this architecture. It is responsible for national resilience and protective security: safeguarding critical infrastructure, ensuring cyber resilience, countering foreign interference and strengthening the integrity of supply chains. Coercion doesn’t only arrive through tariffs or trade bans; it also comes through cyber disruption of ports, manipulation of digital infrastructure, or exploitation of dependencies in food, fuel and health supply chains.

Under the leadership of PM&C, resilience measures from Home Affairs can be integrated with Treasury’s economic levers, DFAT’s diplomacy and Defence’s strategic warning. Without central leadership, these contributions risk being siloed.

Australia’s response to Beijing’s coercive campaign in 2020 and 2021 illustrates the point. DFAT carried the international narrative, Treasury assessed industry impacts, Defence analysed supply chain risks, and Home Affairs reinforced protective measures against interference. Yet it was PM&C, working with the prime minister’s office, that ensured a unified national stance against capitulation, rash retaliation and fracturing alliances. Coordination alone would not have delivered that clarity; leadership from the centre did.

The landscape is changing fast. Economic coercion can now be paired with cyber disruption, disinformation campaigns, and grey-zone operations against critical infrastructure. A whole-of-nation threat requires a whole-of-government response. Therefore, PM&C should: lead horizon-scanning and scenario exercises for economic statecraft; strengthen Cabinet processes to ensure integrated, timely decisions; guard against rhetorical escalation, while framing coercion as illegitimate and destabilising; and anchor resilience efforts across Home Affairs, Treasury, DFAT and Defence, ensuring they complement rather than compete.

Australia cannot stop other states from weaponising economic tools. But we can choose how we respond. Our adversaries count on fragmentation: portfolios pulling in different directions and agencies guarding their turf. The surest way to deny them that advantage is to ensure that PM&C leads, with authority and clarity, in shaping Australia’s economic security strategy.

Economic statecraft is central to Australia’s sovereignty and resilience. And central challenges demand central leadership.