Major Gen (Retd) Jim Molan is author of Running the War in Iraq.

The Australian Strategic Policy Institute is a significant national resource for the consideration of strategic and security issues, and its people are truly world class. Rod Lyon recently put out a paper titled Strategic Contours: The Rise of Asia and Australian Strategic Policy.

In it he addresses how Australia might approach what I consider the most basic of all strategic problems: how does Australia make a judgment on the strategic environment that can be used to determine the structure of the Australian Defence Force? And at a time of uncertainly, with indications of increasing tension but without a direct military threat how does Australia decide how that force would be used?

Source: Strategic Contours: The Rise of Asia and Australian Strategic Policy.

The value of Rod's paper is that he thinks about the key problem of strategic assessment and the uncertainly it brings by taking a quasi-statistical approach: 68% of Asian futures are likely to lie within one standard deviation of the mean and 95% within two standard deviations. Simple perhaps, but also valuable.

Regardless of whether you think strategic futures are normally distributed, the diagram on page 30 (see above) is a great way of looking at an uncertain world using four Asian futures, from Hugh White's Asian concert of power balances at one extreme, through a peacefully cooperative Asia to a competitive Asia (with the area between the two being both cooperative and competitive, which is used as the mean) to a combative Asia at the other extreme.

The diagram would be even better if it had a third axis on which to plot the consequences of each future for Australia.

Australia is facing up to a new White Paper which will consume Defence in the interval between the current government and a new one that, hopefully, cares about Defence. Ultimately, there is a vague chance that Australia will have to do a serious policy review of defence and Rod's work provides an excellent framework around which the debate can be run; particularly as Rod tries to link, in a very general sense, the probability of various Asian futures with percentages of budget expenditure.

For example, the edge of the 68% probability Asian future, which lies between a cooperative Asia and a fully competitive Asia, half way to a combative Asia, might require what is called a 'downstream hedging policy' that in turn might require an ADF based around 2% of GDP. Rod also provides more nuanced views of what percentage of GDP other futures might bring.

ASPI is of further value to us because in December 2008, Mark Thomson and Andrew Davies produced some valuable work called Strategic Choices: Defending Australia in the 21st Century, in which they offered views on the kind of ADF (in materiel/equipment terms) for various percentages of GDP. Of interest to me is Option Two, the Focused Force, the cost of which was assessed as being 'less than 2% of GDP'. This force is healthily robust but by no means extreme. In fact it looks remarkably like the Force 2030 that came out of the 2009 Defence White Paper and it matches the downstream hedging situation in Lyons' diagram.

At a time when Australia is about to spend 1.5% of GDP or less on Defence, these works are important. Mark Thomson, in the ASPI paper Crying Poor? The Affordability of Defence Expenditure, has reminded us that Australia can afford such expenditure despite the flawed Intergenerational Reports and the Treasury Secretary's comments.

But just when I thought it was safe to go back in the water, Mark Thomson comes out with How Much is Too Little: Learning to Live with a Smaller Force, where as a senior analyst for defence economics at ASPI, he adopts the mantle of strategic seer, showing remarkable confidence in his ability to foretell the future, where there are very few unknowns in the world, where every advertised improvement in the ADF supposedly started by the Howard Government has produced an overindulged ADF that should now be cut, and where, in a military sense, just enough is probably far too much.

ASPI: a great source of analysis when it comes to figures, but I wonder if they might be a bit short on operational experience from which to conduct the next step in force structuring.