For most of the 1990s, the island of Bougainville was the subject of a counterinsurgency campaign administered by the Papua New Guinea state. The denial of humanitarian aid, extra-judicial killings and forced displacement were just some of the egregious tactics employed. Papua New Guinea’s main international benefactor, Australia, publicly remained aloof from the hostilities. However, in reality, the Australian state was covertly sponsoring Papua New Guinea’s counterinsurgency operations. Drawing on interviews with senior Australian and Papua New Guinea state officials, this paper will offer the first scholarly account of Australia’s proxy war. Employing a theoretical framework influenced by classical Marxism and Foucault, particular attention will be paid to the relationships, calculations and strategies that informed Australia’s criminogenic response.