With tensions rising in the East China Sea between China and Japan, Mr Fraser said there was a real danger of conflict and that he had become "very uneasy" at the level of Australia's compliance with the US's strategic interests.
"Our armed forces are so closely intertwined with theirs and we really have lost the capacity to make our own strategic decisions," Mr Fraser said.
He said the high level of military integration, including through bases such as Pine Gap, meant Australia would have difficulty convincing the world that it was not taking part in a US-led conflict even if, formally, Canberra tried to stay out of it.
He has also called for a new debate about Australian-American military-to-military ties, warning that the secretive Pine Gap facility would become a military target as it would likely be pivotal to the US capability to identify and neutralise Chinese nuclear weapons sites.
Mr Fraser described the American "pivot" into the western Pacific, announced by Mr Obama in the Australian Parliament in 2011, and which relies heavily on Australia in an operational sense, as another strategic error that commits Australia to a wrong-headed US strategy of containment of China.
"Military encirclement was necessary in relation to the Soviet Union but China is quite a different story," Mr Fraser said.
His answer is to pull back by closing down the US training bases in the Northern Territory and advising Washington that Pine Gap will also be shut down.
In an attack on the Labor-Coalition consensus, Mr Fraser said Australia's military was now so entwined with the giant US war machine that, functionally, the country had ceded decisions about what conflicts we eventually become entangled in.Mr Fraser said the US had a record of embarking on disastrous military adventures, from Vietnam (which he originally supported) to Iraq and Afghanistan, and it was increasingly likely that its next military folly would drag in Australia.
He said a progressive blurring of the lines of sovereign independence could be traced back to the collapse of the Soviet Union, which should have been the moment when Australia marked out its own strategic persona.
"That was the time when we should have reassessed our policies and decided that we should exercise greater independence," Mr Fraser said.
"An Australia which was seen to be independent working closely with ASEAN [the Association of Southeast Asian Nations], which is a remarkable diplomatic success story, would contribute more to peace and security in own part of the world than the close surrogate alliance with the United State."
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