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CANBERRA (Reuters) - Australia will rapidly beef up its naval strength and extend a A$60 billion ($48 billion) arms build-up to counter the growing military power of neighbors in the Asia-Pacific region, Prime Minister Kevin Rudd said.
Rudd, in a speech to veterans late on Tuesday, said the modernization of Asian military forces, including advanced naval submarine and air combat capabilities, meant Australia needed its own substantial arms increase over time.
"The demographic changes in our region will mean that by 2020 when we look to our north, we will see a very different region to the one we see now, one where population, food, water and energy resource pressures will be great," Rudd said. "The Asia-Pacific will become a much more contested region.
"We need to make sure we have an Australian Defense Force that can answer the call if it is needed. The truth is our defense has been overstretched for a long time," Rudd said, adding Australia must keep its global "middle power" status.
Rudd did not spell out which countries in Asia could pose a threat to Canberra -- a close U.S. ally -- but Australian military planners are wary of China's arms build-up and the expanding reach of India's military.
Both neighboring Indonesia and Malaysia are also building more powerful air forces equipped with modern Russian aircraft.
Rudd said the United States would remain "strategically dominant" and be the bedrock of Australia's future security alliances, but Washington would likely see its influence decline compared with other economies.
Australia's military has already embarked on a 10-year modernization, including large amphibious assault ships, missile destroyers, stealth fighter aircraft, cruise missiles, tanks and helicopters, as well as a bigger army.
"We need to be aware of the changes taking place and we must make sure that we have the right mix of capabilities to deal with any contingencies that might arise in the future," Rudd said.
"We need an enhanced naval capability that can protect our sea lanes of communication and support our land forces as they deploy," he said.
Security analyst and retired navy Commodore Sam Bateman said Rudd's comments were the most aggressive by an Australian leader for many years, almost level with former conservative leader John Howard's threat of pre-emptive strikes on neighbors if needed.
"This seemed to be a fairly hawkish statement. Within the region there is not necessarily an arms race as such. They are just catching up with what other countries already have," Bateman told local radio.
Bateman, now teaching maritime security in Singapore, said the statement reflected Australia's long insecurity with Asia, despite Rudd being a fluent Mandarin speaker and China expert.
"We can have a very insular outlook that smacks of seeking security against that region to our north, rather than with the region," he said.
Australia was an original member of the U.S.-led coalition that invaded Iraq and has around 1,100 troops, including special forces commandos, in Afghanistan battling the Taliban.
Rudd's centre-left government, elected last year, is preparing Australia's first national security statement to flag how it will approach defense and security challenges, ahead of a strategic planning paper early next year.
Editing by Michael Perry and Alex Richardson