1.    INTRODUCTION

1.1   This strategic assessment evaluates the key elements in New Zealand's external environment. Its judgements are relevant to any review of New Zealand's defence and security policy but are applicable in other contexts also.

1.2   The assessment is necessarily selective.

• It focuses on strategic developments - those which affect the fundamental character of the environment.

• It is concerned with security - New Zealand's ability to live in peace and prosperity in the world.

• It perforce concentrates more on developments which might produce adverse or negative consequences for New Zealand than the reverse.

• It looks generally five years out. Some trends beyond that are identified, but the relevant judgements are correspondingly more speculative.

1.3   New Zealand is not directly threatened by any other country nor do we judge that New Zealand is likely to be involved in widespread armed conflict within that five year period. But the strategic environment in the Asia-Pacific region¹ over that time contains a number of challenges for New Zealand.

• New Zealand's interests are directly affected by competition for marine resources in the waters around New Zealand.

• New Zealand's assistance is likely to be sought in dealing with problems arising from weak governments in the region.

• New Zealand's strategic environment will be disturbed by challenges to or shifts in the balance of power in the region.

1.4   Australia plays a unique role in New Zealand's security. As a prosperous and benign neighbour it makes a major contribution to the stability of New Zealand's immediate region. Australia is watchful of developments to its north and west and well attuned to trends which may have an adverse impact on its security.

1.5   In the wider world the multilateral systems for managing international peace and security, of crucial importance to New Zealand, are in a reasonable state. They are not by and large affected by great power gridlock, but they are under pressure from a number of directions.

1.6   Globalisation will continue to shape the world and national economies, although there is a growing rejection in the developed world of some of its consequences. These pressures are being felt in the systems for managing the global economy.

1.7   US military supremacy puts it beyond challenge by other major powers, although not beyond the political and military need to work with other countries. The US will act forcefully to deal with terrorists and with threats from states armed with weapons of mass destruction and/or missiles, and will look for international support in doing so.

1.8   Inter-state conflict is increasingly rare but conflict resulting from communal (linguistic, racial or religious) tensions within states is all too common. There is no international consensus on why, when and how to intervene in such conflicts, but regardless the UN (and regional organisations) will continue to be called upon in such situations and states such as New Zealand which are committed to the UN and have reliable armed forces will be in the front line of those asked to contribute.

1.9   There are a range of global illegal trades which because of their sheer scale threaten the world's political and economic systems - drugs, people and the money derived from these transactions are the most prominent. The Pacific Islands are particularly vulnerable to being exploited for these purposes. Controlling such trades requires a collective international response.

1.10   We summarise the key judgements in respect of each of these challenges below. The detail in support of these judgements, and coverage of a number of other topics, is set out in the body of the assessment.

PREVIOUS | CONTENTS | NEXT