Australia is an island nation straddling the Indian Ocean basin and the South Pacific. Once a colony of the United Kingdom, the country began a move toward independence in 1901. Today, the Commonwealth of Australia encompasses the mainland of the Australian continent, Tasmania and more than 8,000 other islands in the continent’s surrounding waters.
Australia’s interior, known as the Outback, is mostly desert. This largely uninhabitable area is home to Australia’s iron and coal reserves, among the world’s largest. Mining has grown in importance for the Australian economy and remains a key driver of future economic growth.
The Melbourne-Sydney-Brisbane corridor forms the population core along the fertile South Eastern coastline, while the capital Canberra is situated in the interior near the Murray-Darling River System. The Murray-Darling Basin is Australia's agricultural heartland but is cut off from the core by the mountains of the Great Dividing Range.
Australia's main geographic challenge is managing its isolation and small population, which is stretched thinly along its coasts. These factors affect almost all domestic and foreign policy decisions. Distance and isolation mean that Australia relies heavily on shipping lanes for its economic security. This has led Australia to build close alliances with global maritime powers — first the United Kingdom and later the United States — to protect its access to ocean trade as well as deter attacks from other powers.
Increasingly, Canberra must balance its strategic, military and cultural ties to the United States and Europe with greater economic integration with East and Southeast Asia, and especially China — its largest trading partner.