A contingent liability: why resolution of the Senkaku/Diaoyu Islands dispute is in Australia's national interest

This paper examines Australia's national interest in the ongoing dispute between Japan and China over the Senkaku/Diaoyu Islands. It provides an overview of the history of the dispute, and analyses the potential implications for Australia of any escalation between the claimants.

It contends that non‐resolution of the dispute could result in an escalation of tension, including the possibility of conflict between Japan and China. It also asserts that any such conflict would likely disadvantage Australia in a number of ways, including an adverse impact on Australia's significant trading relations with the key states in Northeast Asia. It concludes that the dispute presents a 'contingent liability' to Australia, and that Australia's national interest is best served by a non‐military resolution to the dispute, based on rule‐based negotiation and arbitration.

This paper was also published in the Indo-Pacific Strategic Digest series.

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