The latest Defence Update reveals an inability to deal with new realities

Now Washington wants us to fight in Iraq, with or without United Nations approval. This will cost Australia hundreds of millions of dollars and an unknown number of lives (of course, Iraqi military and civilian casualties could be horrendous). It already costs us billions each year to maintain high-tech forces for US-led coalition war. Indifferent to these costs, blind to the risks of pre-emption, slavish almost to the point of self-abnegation, the Government clings to the US as a literal security blanket.

US missile defence, a still-unproven technology, can do little for us. We are not threatened with ballistic missile attack. The primitive missiles possessed by North Korea are wildly inaccurate and, even if Pyongyang has nuclear weapons (debateable), on the CIA's estimate it has only one or two. It seems doubtful that these would be wasted on us.

But missile defence is fuelling a renewed nuclear arms race in our region. Russia and China have reacted by starting to upgrade their nuclear forces. Beijing has tested dummy or decoy warheads. Even assuming that its denials of having already done so can be accepted, sooner or later it will test Multi-Independent Re-entry Vehicle warheads (MIRVs) - multiple nuclear warheads on the one missile. India will react to China's moves, Pakistan to India's and so on in the deadly escalation cycle of arms races.

The Bush administration's pre-emption policy sets dangerous precedents. If Washington can attack other countries pre-emptively, so too can anyone who feels (or claims to feel) threatened. Similarly, US withdrawal from the Anti-Ballistic Missile Treaty caused Russia to abandon the START II nuclear arms control agreement. North Korea suddenly felt able to threaten withdrawal from the Nuclear Non-Proliferation Treaty. If Washington can walk away from arms control treaties, so can anyone else who feels like it.

Bush's arrogant unilateralism is a problem for many strong US allies. The North Atlantic Treaty Organisation has been severely fractured by Washington's drive for pre-emptive war against Iraq. In almost no liberal democracy, including Australia, is there popular support for a war without UN approval.

At best, the new strategic paper is a half-way house on the road to realistic and affordable security policies. The demands it places on taxpayers are unsustainable and should not be supported. There is no call (other than populist) for a "khaki budget"; we can meet our needs by reducing some traditional capabilities and funding new ones with savings.